What is Form 16: Everything you should know about

Introduction:

In case of salaried taxpayers, Form 16 is regarded as one of the most important documents for income tax return filing. Besides this, for taking a housing loan or vehicle loan, the bank will also ask for your Form 16. Therefore, you must be aware of Form 16 and its benefits. This article elaborates all the facts about Form 16. Let’s read…

What is Form 16?

Form 16 is a certificate of tax deducted at source by the employer in respect of the employer’s salary. The employer issues Form 16 to its employees as a proof of the tax deduction from salary. Form 16 is the pre-requisite for filing income tax return online and claiming the credit of tax deducted by the employer. Further, it is mandatory for the employer to issue Form 16 under section 203 of the Income Tax Act, 1961.

Who is eligible for Form 16?

The salaried individuals whose income falls under the taxable slab are eligible to get Form 16 from their employers. You must be aware that if your total income does not exceed Rs. 2.50 Lakhs, you are not liable for ITR filing and pay any amount of income tax. But for those individuals whose salary exceeds the threshold of Rs. 2,50,000, the employer is obliged to deduct TDS and issue Form 16 to such individuals. Thus, for ascertaining eligibility for Form 16, you should check whether your salary income is more than Rs. 2.50 Lakhs or not.

Note:

• In the case of some salaried individuals, it is seen that their salary income is below Rs. 2,50,000 but after considering other income, their total income crosses the threshold limit of Rs. 2,50,000. So, a question arises whether the employer is liable to deduct TDS in this case. Please note if the employee provides the details of such other income to the employer, the employer should deduct TDS on the salary after considering such other incomes also.
• Further, if you disclose your income from other heads to the employer, he shall consider the same for TDS deduction.
• If the income of an employee is below basic exemption limit, the employer will not deduct any TDS and may not issue Form 16.

When is Form 16 issued to employees?

The employer is liable to issue Form 16 on an annual basis for the financial year. Form 16 is to be issued on or before 15^th June of the next financial year. For example: If the F.Y. 2021-22, Form 16 should be issued by the employer on or before 15^th June 2022.

Can the employee claim credit of TDS on the basis of Form 16?

Yes, the employee can claim credit of TDS deducted by the employer on the basis of Form 16. Details of TDS deducted on salary can also be checked from Form 26AS or Annual Information Statement available on Income Tax Portal.

Form 16 Format

Form 16 has two parts- Part A and Part B.

PART-A: Part A contains the following information as below:

• Name and Address of the Employer
• Name and Address of the Employee
• PAN & TAN of the Deductor (Employer)
• PAN of the Employee
• Assessment Year
• Period with the Employer
• CIT (TDS) Details
• Summary of the amount credited and the TDS deducted & deposited in respect of the employee

PART-B: Part B is an “Annexure” to Form 16 which contains the following details:

• Detailed Break up of Salary
• Allowances to the extent exempt u/s 10
• Other Incomes (like House Property/ Capital Gains/ Other Sources)
• Deductions under Chapter VIA (section 80C to 80U)
• Relief u/s 89
• Tax payable including surcharge & cess
• Verification by the deductor

What is Form 16A?

Form 16A is also a certificate of tax deduction issued by the deductor like Form 16. However, there is a basic difference between Form 16 & Form 16A. Form 16 is issued by the employer for tax deduction in respect of salary income whereas Form 16A is issued by the deductor for TDS deducted in respect of income other than salary. There are number of cases where Form 16A is issued by the deductor. To take some examples:

• Section 194C: TDS on payments in respect of contracts or subcontracts
• Section 194H: TDS on Commission or Brokerage
• Section 194J: TDS on Professional or Technical Services
• Section 194I: TDS on Rent

When is Form 16A issued by the deductor?

• Form 16A is issued on a quarterly basis by the deductor
• Form 16A shall be issued by the deductor within 15 days from the end of the due date of filing TDS return for the relevant quarter.

What is the benefit of Form 16 & Form 16A?

The details of income and tax deduction as per Form 16 & 16A is auto-populated in the IT Portal. This will help you to file income tax return with ease as you only need to fill details not populated on the IT portal saving your time.

Other FAQs:

How can I get Form 16?

You can ask your employer for Form 16. Only the employer can download Form 16 from TRACES portal and issue it to you. Downloading Form 16 directly by the employee from the TRACES portal is not possible.

I am a Pensioner; how can I get Form 16?

In the case of Pensioner, he is required to approach the bank where his pension is credited and such bank will issue Form 16 to him.

For Income Tax Return Online Filing, connect at 9660930417