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Form 16: What is Form 16, Steps to Download Form 16 from Traces and how to file ITR from Form 16

What is Form 16?

Form 16 is a certificate issued to salaried employees in India by their employers, serving a crucial role in the process of filing income tax returns. Mandated by Section 203 of the Income Tax Act, 1961, this document provides a detailed overview of the employee's salary and the corresponding tax deducted at source (TDS) by the employer, subsequently deposited with the government.

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What details does Form 16 include?

Form 16 is divided into two parts: Part A and Part B. Each part provides different details related to the employee's income and taxes deducted at source (TDS). Here's a breakdown of the details included in each part:

Part A of Form 16:

  1. Employer and Employee Details

    • Employer's name, address, and TAN (Tax Deduction and Collection Account Number).

    • Employee's name, address, and PAN (Permanent Account Number).

    • Employer's PAN and TAN.

  2. Period of Employment:

    • Duration of the employee's service with the employer during the financial year.

  3. Summary of TDS:

    • Total TDS deducted and deposited with the government on behalf of the employee.

    • Challan details, including BSR code of the bank branch where TDS is deposited, date of deposit, and serial number of the challan.

  4. Acknowledgment of TDS:

    •  Acknowledgement number of the TDS return filed by the employer.

Employees are required to use both Part A and Part B of Form 16 while filing their income tax returns. Part A provides a summary of TDS details, while Part B gives a comprehensive breakdown of the salary and other income components.

Part B of Form 16:

  1.  Detailed Salary Breakup:

    • Detailed breakdown of the employee's salary, including basic salary, house rent allowance (HRA), special allowances, bonuses, etc.

  2. Exemptions and Deductions:

    • Details of exemptions claimed by the employee, such as HRA exemptions, Leave Travel Allowance (LTA), etc.

    • Deductions under various sections like 80C, 80D, 80G, etc.

  3. Perquisites and Profits in Lieu of Salary:

    • Any additional benefits or perquisites provided by the employer.

    • Any profits in lieu of salary, if applicable.

  4. Income Chargeable under the Head 'Salaries':

    • Net taxable income after considering exemptions, deductions, and other components.

  5. Relief under Section 89 (if applicable):

    • Relief granted to the employee in case of arrears or advance salary.

  6. Details of Other Incomes:

    •  Any additional income declared by the employee.

  7. Verification and Declaration by the Employer:

    •  Certification by the employer regarding the correctness of the information provided in Form 16.

Who is responsible for issuing Form 16?

Employers are obligated to furnish Form 16 to their employees by June 15th of the assessment year, facilitating the accurate and timely filing of income tax returns. This certificate serves as proof of tax payment, aiding employees in reconciling their income and TDS, ensuring a smooth tax return filing process.

When Will Form 16 Be Available For 2023-24?

Form 16 for the financial year 2023-24 is anticipated to be accessible by June 15, 2024. Employers are obligated to furnish Form 16 to employees by this deadline, provided they have deducted TDS on the employee's salary from April 2023 to March 2024. If an employee misplaces their Form 16, they have an option to request a duplicate copy from their employer. Additionally, employees can retrieve Form 26AS from the income tax e-filing portal, offering a comprehensive overview of TDS deductions and deposits associated with their PAN, thereby serving as evidence of the TDS transactions.

Key points regarding the eligibility criteria for Form 16

Form 16 is not a document that individuals are eligible for; rather, it is a certificate provided by employers to their employees. Here are the key points regarding the eligibility criteria for Form 16:

Employment with TDS Deduction:

Form 16 is typically issued to employees by their employers if the employer has deducted TDS (Tax Deducted at Source) from the employee's salary.

Income Tax Deduction Requirement:

Employees who have taxable income are eligible to receive Form 16. If an employee's income is below the taxable threshold, TDS might not be deducted, and Form 16 may not be applicable.

Salaried Employees:

Form 16 is primarily relevant for salaried individuals. It provides details of salary income, TDS deductions, and other related information.

PAN Details:

The employee must have a PAN (Permanent Account Number) as it is a crucial identifier in Form 16.

Indian Tax Resident:

Form 16 is applicable to individuals who are residents of India for tax purposes.

Important note: If an individual is a freelancer or self-employed, they may not receive Form 16 because they are responsible for their own tax calculations and filings. In such cases, other documents, like Form 26AS, may be used to gather information on TDS and income.

 

Ultimately, the issuance of Form 16 is the responsibility of the employer, and eligibility is based on the employment and TDS deduction criteria mentioned above. Employees should receive Form 16 from their employers at the end of the financial year to assist them in filing their income tax returns.

What is the purpose of Form 16

Proof of Tax Deduction:

Form 16 serves as proof that the employer has deducted TDS (Tax Deducted at Source) from the employee's salary. This is a legal requirement, and the certificate validates that the employer has fulfilled this obligation.

Details of Income and TDS:

The form provides a comprehensive summary of the income earned by the employee and the corresponding TDS deducted and deposited with the government by the employer. This helps in reconciling the income declared by the employee and the tax paid on it.

Facilitates Income Tax Return Filing:

Form 16 is a key document for individuals filing their income tax returns. It contains all the necessary details required for accurate reporting of income, deductions, and TDS while filing the tax return.

Verification of TDS in the TRACES Portal:

The details provided in Form 16 can be cross-verified with the TRACES (TDS Reconciliation Analysis and Correction Enabling System) portal maintained by the Income Tax Department. This ensures the accuracy and legitimacy of the TDS information.

Assistance in Loan and Visa Processing:

Form 16 is often required by financial institutions when processing loans or by consulates when applying for a visa. It serves as proof of income and tax compliance.

Employer-Employee Communication:

Form 16 acts as a communication tool between the employer and the employee, summarising the financial transactions related to salary, taxes, and deductions for the given financial year.

Compliance with Legal Requirements:

Employers are legally obligated to issue Form 16 to their employees. Failure to provide this form can result in penalties for the employer.

Form 16 is essential for ensuring transparency, compliance with tax regulations, and facilitating the smooth process of income tax return filing for salaried individuals in India.

What steps can I take if I haven't received Form 16 from my employer or if I've left my job and need the form?

Your employer is expected to issue Form 16 by June 15. If not received by then, you can request it from the company's employee portal or HR department. Even if you've left your job, the employer must provide Form 16 upon request. If not received, you can download it or inform the Jurisdictional Assessing Officer (A.O.) about the non-receipt. The A.O. may take action, including penalties, if the employer is found at fault.

How to Download Form 16 from TRACES?

To download Form 16 from TRACES (TDS Reconciliation Analysis and Correction Enabling System), you need to follow these steps:

Step by Step Guide to Download Form 16 from TRACES:

2

Login to TRACES:

Log in using your User ID, Password, TAN (Tax Deduction and Collection Account Number), and the captcha code.

3

Navigate to the "Downloads" Section:

After logging in, go to the "Downloads" menu.

4

Select "Form 16":

Under the "Downloads" menu, choose the "Form 16" option.

5

Select the Relevant Assessment Year:

Choose the assessment year for which you need the Form 16.

6

View/Download Form 16:

Once you have selected the assessment year, you will see a list of available Form 16s. Click on the relevant link to view or download the Form 16.

7

Verify Details:

Verify that the details in Form 16 match your actual salary details and TDS deductions.

8

Print the Form 16:

If needed, you can print the Form 16 for your records.

1

Visit the TRACES Website:

Go to the TRACES website at https://contents.tdscpc.gov.in/

Important Points to Note:

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Digital Signature:

Form 16 downloaded from TRACES will have a digital signature for authenticity. Ensure that the digital signature is valid.

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Password Protection:

The Form 16 PDF downloaded from TRACES is often password-protected. The password is typically the TAN of the deductor (employer).

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Form 16 Part A and Part B:

TRACES may provide both Part A and Part B of Form 16. Part A is usually generated by the TRACES system, and Part B is prepared by the employer.

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Contact Employer if Unavailable:

If Form 16 is not available on TRACES or if you face any issues, contact your employer. Employers are responsible for generating and uploading Form 16 on the TRACES portal.

Always ensure that you download Form 16 from the official TRACES website and use secure internet connections to protect your personal information. If you encounter any difficulties, you may seek assistance from your employer or a tax professional.

What can you do in the absence of Form 16?

Even if you haven't received any Form 16 from my employer you are still required to file your income tax return, its absence does not exempt you from the obligation to file your tax return.

Here's what you can do in the absence of Form 16:

Collect Salary Details:

Gather details of your salary, including your basic salary, allowances, bonuses, and any other income components.

Collect TDS Information:

Obtain information on the TDS deducted by your employer. You can find this information in your payslips or your Form 26AS.

Use Form 26AS:

Access your Form 26AS from the income tax e-filing portal. Form 26AS provides a comprehensive view of the TDS deducted against your PAN for various sources of income.

File Income Tax Return:

Based on the salary and TDS information you've collected, you can file your income tax return using the appropriate ITR (Income Tax Return) form on the income tax filing portal.

Claim Deductions:

If you have eligible deductions under various sections (like 80C, 80D, etc.), ensure you claim them while filing your return.

Keep Records:

Maintain records of your salary details, TDS information, and any other relevant documents. It's advisable to keep these records for future reference.

It's essential to file your income tax return within the stipulated deadlines, even if you don't have Form 16. Failing to file your return on time may attract penalties and interest.

What is Form 16B?

Form 16A is a certificate issued for Tax Deducted at Source (TDS), provided alongside Form 16. While both Form 16 and Form 16A are TDS certificates, Form 16 pertains to individuals receiving income from salary. In contrast, Form 16A applies to all incomes other than salary.

 

Form 16B, on the other hand, is a certificate for tax deducted on the purchase of property. TDS under section 194IA is mandatory when a person buys an immovable property for a consideration exceeding 50 lakhs of rupees. In such cases, the buyer is required to deduct TDS from the seller and file Form 26QB. Subsequently, Form 16B is generated, serving as the TDS certificate. It contains essential details such as the buyer's and seller's information, property details, consideration amount, and the TDS deduction amount.

Distinctions between Form 26AS and Form 16

Form 26AS presents a comprehensive view of tax credits, encompassing TDS from various sources, Whereas Form 16 is specific to salary income and is provided by employers to employees.

Aspects
Form 26AS
Form16
Issuer
Generated by the Income Tax Department
Issued by Employers to Salaried Employees
Content
Consolidated statement of tax-related info
Breakup of salary, allowances, deductions
Sources
TDS, advance tax, self-assessment tax, refunds
TDS from employer, employer details
Accessibility
Online through the e-filing portal
Provided by the employer to the employee
Purpose
Overview of tax credits
Verification of TDS details for tax filing
Applicability
All taxpayers
Salaried individuals
Frequency
Regularly updated as transactions occur
Issued annually at the end of the financial year

How can discrepancies between Form 16 and Form 26AS be corrected?

  1. If you notice a mismatch between the information in Form 16 and Form 26AS, it's important to address and rectify the discrepancies. Here are the guidelines you can follow to resolve the mismatch:

  2. Carefully compare the details in Form 16 and Form 26AS. Check for discrepancies in the amount of income, TDS, and other relevant information.

  3. Contact Employer, If the mismatch is related to your salary income and TDS, reach out to your employer. Verify the details with them and ensure that the information in Form 16 is accurate.

  4. Check TDS Return, Ensure that your employer has filed TDS returns accurately. You can verify this by checking the TDS return filed by your employer on the TRACES website.

  5. Raise Discrepancies with the Employer, to bring them to the attention. Provide supporting documents and seek clarification.

  6. If the employer acknowledges the discrepancies, request a revised Form 16 with the correct details.

  7. The employer has to revise TDS returns to rectify the mistakes. The revised TDS returns will be reflected in your Form 26AS.

  8. Once the TDS returns are corrected by the employer, the updated information should be reflected in your Form 26AS. Check Form 26AS periodically to ensure that the corrections have been made.

  9. File Revised Return (if necessary): If you have already filed your income tax return with incorrect information, and the corrections result in a change in tax liability, consider filing a revised return.

  10. It's crucial to rectify any discrepancies promptly to avoid issues during the income tax assessment process. Communication with your employer, monitoring Form 26AS, and taking corrective actions will help ensure accurate reporting of your income and taxes.

Is the Income Tax Return and Form 16 the same?

No, the Income Tax Return (ITR) and Form 16 serve distinct purposes in the tax filing process. While Form 16 is a statement provided by employers detailing salary and TDS deductions, the Income Tax Return is a comprehensive form submitted by individuals or businesses to report their complete income, deductions, and taxes paid to the tax authorities. Form 16 is specific to salary income and TDS, whereas the Income Tax Return provides a comprehensive overview of one's financial situation for a specific financial year.

Incase of Multiple Employers during a year

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Collect Form 16 from Each Employer:

Ensure that you collect Form 16 from each employer for the respective periods of employment. Each Form 16 will represent the salary and TDS details for your employment with that particular employer.

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Consolidate Income:

Consolidate the income details from all Form 16s. Sum up the income, deductions, and TDS details to get a comprehensive view of your financials for the entire financial year.

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Declare Previous Employer's Income:

While filing your ITR, declare the income earned from your previous employer along with the relevant details in the appropriate sections. This ensures that your total income is accurately reported.

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Claim Deductions and Exemptions:

Ensure that you claim deductions and exemptions for the entire financial year. Some deductions, such as