/ INCOME TAX

COMPLETE OVERVIEW ABOUT FORM 16

BRIEF INTRODUCTION

  • As we know that is every organization, where there exists an employer employee relationship, every employer is liable to deduct TDS from the salary paid to their employees.
  • Thus, Form 16 is a certificate issued by the employer, under Income Tax Act, 1961, to their employees, evidencing the deduction of TDS. It constitutes if two parts, newly, Form16 Part A and Form 16 Part B. Such a form, evidencing deduction of TDS, helps in easy filing of ITR by the employees.
  • Uploading of such certificate, helps in getting pre filled form for filing their respective ITR.
  • Every employer deducting TDS is required to issue Form 16 on or before 15 June, coming after the year in which such TDS was deducted.

PART A

  • Part A of form 16 provides details of the quarterly TDS deducted and deposited, along with the details of PAN, TAN of the employer and other such information required to be disclosed.
  • The employer can generate and download part A of Form 16 through the TRACES (https://www.tdscpc.gov.in/app/login.xhtml) portal and shall authorize the same, before issuing it to the respective employees.
  • In case of change in job by any employee in a given financial year, every employer under whom such employee is employed, will issue a separate Part A of Form 16, for the period of employment.

A sample Part A of a Form 16 as per the format of  Tax dept is as follows:

part A form 16
COMPONENTS OF PART A
  • Details of the employer regarding his/her name and registered address.
  • PAN and TAN number of the respective employer.
  • Permanent Account N​umber of the employee under whose name, such certificate is issued.
  • Detailed summary of TDS deducted and deposited during the quarter. The same shall be authorized by the employer before issuing it.

PART B

  • The Part B is an annexure or supporting section to Part A. Part B specifies the detailed information regarding the respective employee’s salary and deductions approved under Chapter VI A.

A sample Part B of a Form 16 as per the format of Tax Dept is as follows:

part B form 16

COMPONENTS OF PART B

  • Detailed information on the salary provided.
  • Details-on exempted income under Section 10 of Income Tax Act, 1961.
  • Deductions made from such salary, like –
  • Deduction-under section 8C, relating to life insurance premium paid, contribution to PPF etc.
  • Deduction under section 80CCC, relating to contributions made to pension funds.
  • Deduction-U/s 80CCD (1), relating to employee’s contribution to pension scheme.
  • Deduction under section 80CCD(1B), relating to employee’s contribution to notified pension scheme.
  • Deduction-U/s 80CCD (2), relating to employer’s contribution to pension scheme.
  • Deduction under section 80D, relating to health insurance premium paid.
  • Deduction-U/s 80E, relating to interest paid on loan taken for higher education.
  • Deduction under section 80G, relating to donations made.
  • Deduction-U/s 80TTA, relating to interest income on savings account.

INFORMATION FOR FILING FORM 16

To file the complete Form 16, the employer should be in receipt of the following, namely –

  • Full breakup of salary of every employee of their organization.
  • Different allowances exempt under Section 10
  • Deductions to be claimed under Schedule VI.
  • Gain or loss from house property owned by the employee and the same is subject to TDS.
  • Income from other sources and are subject to TDS.
  • Detailed information of deduction under 80C.
  • Net taxable income as determined based on the above information.
  • Final Tax liability/refund due.

ELIGIBILITY FOR FORM 16

  • As per the regulations issued by the Indian Finance Ministry, every salaried individual whose salary is subject to tax under the normal slab rate is eligible for the Form 16.
  • Otherwise, if their salary is not subject to tax or below the minimum income exempt from tax, then such employees have no obligation to get TDS deducted from their salary and thus, the employer of such employees is also under no obligation to file and issue the Form 16.

IMPORTANT ASPECTS TO BE CONSIDERED

  1. Where an employee is in receipt of Form 16, duly filled and certificated by its employer, such employee will then be responsible to ensure that all the details mentioned therein are correct.
  2. Apart from verifying the personal particulars and details of amount of income and TDS deducted, another important aspect is to confirm the correct PAN number be mentioned in Form 16.
  3. In case, any discrepancy is found, the same should be notified to the HR /Payroll/ Finance Department of the organization on an immediate basis and get the same corrected.
  4. After due consideration, the certificate will be rectified and the same be issued to the respective employee. On behalf of the employer, he/she needs to update the correction made, in the year end by filing revised return of tax, to credit the TDS proceeds to the correct PAN.

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