All about form 16 details

19 Oct 2022


Form 16


Form 16 is a TDS certificate issued by the employer to its employees. It is issued in the case of a salaried person, it details how much tax has been deducted by the employer and submitted to the Income tax department.


In simple terms, Form 16 certifies how much an employee has earned during a Financial year and how much tax has been deducted. It has 2 parts:- Part A and Part B.




Part A and its components:


Part A has information regarding TDS deducted and deposited by the employer. Also other details such as:


  • TDS certificate number

  • Name and address of the employer

  • Name and address of the taxpayer

  • PAN and TAN of the employer

  • PAN and Reference Number of taxpayer

  • Financial year and period of employment

  • Total TDS deducted and deposited for the year





Part B and its components:


Part B is an Annexure to Part A. It has a detailed view of your salary on which tax is deducted. A detailed breakdown of how the tax was computed by considering the investment declaration made at the beginning of the financial year and proofs to be submitted afterward. The details include



  • Details about salary

 It includes the gross income received from the employer in a financial year. It is further divided into three parts

1. Salary as per section 17(1)

2. Perqusities as per section 17(2)

3. Profits in lieu of salary under section 17(3)

The total of these 3 incomes is called Gross salary.

                            

  • Information on allowances  (Exemption under section 10)

It includes the allowances given by the employer to its employees for tax benefits. Allowances such as House rent allowance(HRA), Leave travel allowance(LTA), etc. All allowance can only be claimed if the conditions as per the sections are fulfilled.       

 

  • Any other income reported by the employee 

It includes the information of other income reported by the employee to their employer. It further gets added to the gross income. Mostly House property income is reported in it.

 

 

  • Deductions available against that income ( Chapter VI A)

Deductions such as 80c, 80d, 80ccd1B, 80ccd2,etc all such deductions are included in it. All tax-saving investments made by the employees and reported to the employer are included in it and it gets deducted from the Gross total income.

 

  • Your net tax liability

After the chapter VIA deductions are calculated we get the Total Taxable Income on which now the tax will be calculated and deducted. After that Rebate, surcharge, and health & education cess is calculated and we get the Net tax liability.

 

  • Verification of employer

After all the above calculations verification is need to be done by the employer stating that all the above information is correct. 

 

 

 

What is form 16A?

 

Form 16A is also a TDS certificate, but the difference here is form 16 is issued for salaried employees and whereas Form 16A is issued on TDS deducted on income apart from salary. Such as TDS on interest income like 

Fixed deposits, Savings deposits, Insurance commission, etc.



When is Form 16 issued?


If you are a salaried person and your employer has deducted tax on your income, then you are eligible for Form 16. The employer needs to provide form 16 on or before 31st May of the assessment year to give you ample

time to file your ITR before the due date. 



Requirement of Form-16 in case of changing of job.

In case of a job change, an individual must collect form 16 from all his employers while filing the income tax return. Also, the income details must be reported to the new employer for a proper tax deduction.  



FAQs


1. Is form 16 mandatory?


: It is mandatory for employers to issue form 16 if any tax has been deducted. Also to check if all the investments declared are properly mentioned in it.


2. Can we claim investments if not reflected in form 16?


: Sometimes employees forgot to give the declaration of their investments because of that additional tax gets deducted. While filing the ITR you can easily claim that deduction and get the refund. 



3. How can we know if the TDS information in form 16 is correct?


: You can cross-check form 16 with form 26AS whether the tax deducted is deposited with the Income tax department.


                                            


Chetan Kori