What is Form 16?
Every year your employer will issue this document. It gives details of the tax deducted by the employer. If you have not received your Form 16, you can use the worksheet that the income tax (I-T) department provides to calculate and declare the amount. Form 16 is useful in filing your income tax return (ITR).
Download FORM NO.16 - Income Tax Department
http://law.incometaxindia.gov.in/DITTaxmann/IncomeTaxRules/pdf/itr62Form16.pdf
About Form 16
Form 16 is a certificate or a document that is issued to salaried personnel in India by their respective employers. The certificate carries necessary details that assist in the process of filing Tax Returns with the Income Tax Department of India.
Form 16 is a document that is used by salaried personnel as part of the process of filing Income Tax Returns in India. The Income Tax Act of 1961 and the Income Tax Rules of 1962 are the governing laws of the Income Tax Department of India. The Form 16 is an important document that is in accordance with the rules and regulations laid down by the Income Tax Department as well as the Government of India.
The Form 16 is provided by an Employer to the Employee and is used by the employee as reference as well as proof while filing Income Tax Returns. The Form furnishes various details such as Salary Income components of the Employee, Tax Deducted at Source (TDS) by the Employer, and Tax paid by the Employer to the Income Tax Department.
Features
The following features make Form 16 an important part of the entire process of filing Income Tax Returns in India. The Form is especially important to Employees working in a company or firm.
- It is applicable to Salaried personnel
- It is a Tax Deduction at Source (TDS) Certificate issued by the Employer
- It acts as proof that the Employer has deducted TDS while paying the Employee
- It is proof of the Salary that the Employee receives
- It reflects the amount of Income Tax paid by the Employer on behalf of the Employee
- It can be used by the Employee as proof of his Income if the Income Tax Department wishes to scrutinize the Income Tax Returns in detail
- Only an Employer with a TAN (Tax Deduction Account Number) is eligible to deduct TDS, and therefore issue a Form 16
- If TDS is not deducted the Employer is not under obligation to issue a Form 16 to the Employee
- If TDS is deducted, the responsibility to issue the Form 16 to the Employee lies with the Employer
- Information given on a Form 16 can be corrected.
What’s inside it?
Understanding the content of Form 16 helps you file your I-T returns; you may be able to do it yourself if your income comes entirely from your salary, and you have no other source of income. Form 16 has two sections—part A and part B.
Part A consists of your personal details such as your name and address, your employer’s name and address, Permanent Account Number (PAN) of both, the employer’s Tax Deduction Account Number (TAN), and others. Part A also gives details such as the assessment year (AY)—the year in which your tax liability is calculated for the income earned the previous year. This portion of the form also gives details of your period of employment with the current employer.
Next, it gives a summary of the TDS by the employer on behalf of the employee. This is the amount that the employer deducts from your salary as tax periodically and credits it to the I-T department.
Part B of Form 16 is the one that gives most of the details that you need to file I-T return, such as salary paid, other income, tax deducted, and more.
These include those under sections 80C, 80CCC and 80CCD (contributions towards Public Provident Fund, life insurance policies, pension, among others).
Remember, the aggregate amount deductible under these three sections should not exceed Rs. 1 lakh. Then come the deductions under other sections such as 80D (health insurance premium), 80E (interest on education loan), 80G (donations), and others. The total deductions are reduced from the gross income to arrive at the taxable income.
How to use it?
Form 16 is one of the documents that you need to keep handy before or while filing your ITR, which has to be done till 31 July.
While all deduction related details are mentioned in Form 16, you should cross-check the amounts with your investment and other documents. “If there is an error in your Form 16, you will have to ask your employer to rectify it since it is the employer who has generated it for you,” said Rakesh Nangia, managing partner, Nangia & Co.
Remember Form 16 only declares TDS from salary. For other incomes, there are other forms. In case you have changed your job during the year, you have to get Form 16 from both employers and then file your ITR.
Who has to e-file?
If your annual taxable income exceeds Rs. 2 lakh, you have to file income-tax returns. And if this is above Rs.5 lakh, you have to compulsorily e-file your ITR.
To e-file an ITR, you will have to log in to www.incometaxindiaefiling.gov.in (see graphic). While e-filing, you need to furnish your PAN and bank account details. Fill in the correct bank details as this is where a refund will come if you opt for direct deposit into your bank account.
Important components
Following are few key components that are found in a Form 16:
- Personal details of the Employee including Name, Permanent Account Number (PAN) etc.
- Employer details including Name, permanent account number PAN, TAN etc.
- Acknowledgement Number of the Income Tax Payment made by the Employer
- Details of Salary including Gross Salary, Net Salary, Perquisites, Deductions etc.
- Total Income and Total Tax deducted
- Details of Education Cess or Surcharge etc.
- Tax deducted as per Section 192 (1A)
- Receipt Number of the TDS Payment
- Balance Tax Payable by the Employee or Refundable to the Employee
- Details of Tax Payment including Cheque Number, DD Number, Voucher Number, Challan Number etc.
- Declaration of Tax Payment by the Employer
Responsibilities
- Of the Employer related to Form 16
Form 16 is an important document and Employers are especially required to ensure that every rule related to it is followed meticulously. This is not only in the interest of the Employer and Employee but is also required by law under the Income Tax Act, 1961.
- The signing authority on the Form 16 should be a responsible person of the Company or Firm
- The Salary, Deductions, and other financial details should be calculated carefully
- In case of errors, rectifications should be made and a fresh Form 16 issued
- The Tax deducted from Employees should be paid to the Government in time
- The PAN and TAN details should be filled in correctly
- The Receipt, Voucher or Challan Number of the Tax paid to the Government should be filled in correctly
- Employees should be issued the duly completed Form 16 well in time to file their Tax Returns with the Income Tax Department
- Of the Employee related to Form 16
Though the onus of providing the Form 16 document lies with the Employer, the Employee too, is required to fulfill certain conditions.
- Collecting the Form 16 from the Employer well in time to file Income Tax Returns with the Income Tax Department
- Checking if the details related to Name, PAN etc. are entered correctly
- Checking details related to Salary, Deductions, Education Cess etc.
- Checking Deductions under 80C, 80CCC, and 80CCD
- In case of discrepancies bringing them to the notice of the Employer and getting them corrected
- Keeping the Form 16 safely as proof for the details filled in while filing Income Tax Returns
