Form 16 is the most important document for which any salaried individual waits for. This document is issued by the employer mostly till 31st May for previous financial year. Being a valuable document for return filing for any salaried individual, It is very easy to understand and this article will give you insights on the same.
What is Form 16?
Form 16 is nothing but TDS Certificate issued by the employer summing up TDS deducted on salary and perquisites as received by the employee for the year. it must be issued by the employer if he has deducted TDS on salary. It is required to be issued on or before 31st May of the next financial year in which TDS is deducted.
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Understanding Form 16
Form 16 is divided into two parts which are part A and part B. Let’s understand these parts in detail.
Part A of Form 16
This part contains following details
- Name and address of the employer
- Name and address of the employee
- PAN of the deductor
- TAN of the deductor
- PAN of the employee
- Assessment Year
- Period for which the TDS certificate is issued
- Income Tax Circle / Ward/ Office for TDS as applicable to the employer’s TAN
- Unique serial number of TDS Certificate
- Summary of tax deducted and deposited along with amount deposited and respective receipt number of TDS returns.
Part B of Form 16
Part B of Form 16 is the most important part which will display each vital part of salary and perquisites and contains following details
- Gross Salary
- Exempt Allowances
- Income Chargeable under the Head Salaries
- Any other income reported by the employee (interest on housing loan is also considered here as negative income which will reduce the salary income)
- Gross Total Income
- Deductions under section chapter VI-A (section 80C, 80D etc.)
- Total Income
- Tax payable on total income
- Relief from tax payable (under section 89 etc.)
- TDS deducted
- Net Tax payable or refundable
Points to be noted
- If no TDS is deducted, the employer may issue or may not issue Form 16 at their discretion.
- It is mandatory to issue Form 16 if TDS is deducted from salary income, stating the receipts issued for TDS return which will specify that the tax has been deposited to Central Government.
- If any employer does not issue Form 16 even if TDS is deducted, then he will be liable to pay penalty for non-issuance of TDS Certificate.
- There might be more than one Form16 for one employee if the employee has changed the jobs more than once. However, ITR of such employee should combine income received under head salaries from all TDS certificate and sum up TDS from every Form16.
- If the employee does not receive Form16 (even where TDS is deducted), he cannot escape ITR filing for the fact. If the employee’s income is above the threshold then he has to file ITR even if Form16 is not issued.