What is Form 16 for Salaried Employees?

Form 16 is a crucial certificate which is issued under Section 203 of the Income Tax Act of 1961. This certificate is issued by employers to the salaried individuals working under them. Basically, this form serves as an acknowledgement which states that an employee’s deducted tax has been deposited by the employer with the Income Tax Department.

To know what is form 16 and all the important information related to it, go through this entire blog post.

What is the Use of Form 16?

Form 16, which is issued under Section 203 of the IT Act 1961, outlines the salaried income earned by an employee and the taxes deducted from their salary by the employer. This form is kind of an acknowledgement which ensures that the employer has successfully submitted the TDS to the Income Tax Department.

To put it simply, form 16 is a certificate which states a detailed summary of the following in a particular financial year, generally from April to March:

• Salary earned by an employee
• Taxes paid on the employee's behalf
• Allowances
• Deductions

Form 16 is evidence of the TDS and other crucial information regarding your income for filing an ITR. It plays an essential role in the ITR filing process. Form 16 allows you to report your income and deductions accurately so that you can claim eligible tax refunds from ITD. Form 16 due date is 15th June of every year.

Understanding the Types of Form 16

Form 16 is accompanied by Form 16A. Just like Form 16, Form 16A is also a TDS certificate. But the difference between them lies in the fact that Form 16 is for individuals who receive income from salary while Form 16A is for all incomes other than salary. 

When an individual purchases immovable property for a sum larger than 50 lakhs of rupees, TDS under section 194IA must be deducted. Form 16B is a certificate which signifies the tax deducted on the purchase of property.

In such a scenario, the buyer must deduct the seller's TDS and file form 26QB. After the form 26QB filing, form 16B is generated and serves as the TDS certificate's primary document, which displays the buyer and seller's basic information as well as the consideration and TDS deduction amount.

Which components make up Form 16? 

Form 16 consists of two parts - Part A and Part B.

Part A of Form 16

Here is what Part A of Form 16 looks like:

Part A is a certification which is duly signed by the employer. Part A signifies that the employer has deducted the TDS from the salary of their employee and that the same has been deposited with the Income Tax Department.

As you can see, Part A of the form contains particulars such as:

• The employee and employer’s name and address details 
• PAN details of both
• Employer’s TAN details. 
  

Note: TAN refers to a number which is assigned to an account responsible for tax collection and deduction. TAN helps the IT Department to track the flow of money from the account of employee and employer. 

An organization is not entitled to deduct TDS unless they possess TAN. Hence, in such a scenario, they will not provide the Form 16.

Part B of Form 16

Here is what Part B of Form 16 looks like:

Part B of Form B provides a detailed summary of the employee's pay, benefits, and any claimed deductions under Sections 80C, 80D, etc. This part of the form also shows the total amount of taxable income. It is part A's annexure. If any, information on revenue from other sources is also included in part B of form 16.

Among the components that make up Part B are:

• Detailed salary breakup
• An extensive breakup of the allowances exempted under section 10
• TDS that has been deducted by the employer
• Deductions allowed under Chapter VI-A of IT Act

Who is Eligible for filing Form 16?

If the conditions of eligibility stated in the table below are fulfilled, Form 16 needs to be filed as per the Income Tax Act, 1961.

Verification of Form 16

To ensure accuracy and identify any errors, it is crucial for the employees to cross-verify the details stated under Form 16 through bank statements, salary slips and form 20AS (which is a consolidated statement of taxes which have been deducted and paid). In case an employee identifies any errors or discrepancies, they should bring it to the notice of the employer so that the same can be rectified.

How to obtain Form 16 for Salaried Employees?

If you want access to Form 16, you must ask your employer to issue it for the current financial year. It is the responsibility of the employer to issue Form 16 to his employees. In case you have left the job, you can reach out to the HR or Finance Department of the employer to request Form 16.

How to Download Form 16 as an Employer?

Interestingly, only the employer can download Form 16. He can download form 16 through the official website of the Income Tax Department or the TRACES websites. Form 16 is available in fillable or PDF format which can be printed to obtain a hard copy of it.

Steps to Download Form 16 from Income Tax Portal

To learn how to download the Form 16 from the Income Tax Portal of the Income Tax Department, the employer has to follow these steps:

Step 1: Visit the official Income Tax Portal of the Income Tax Department.

Step 2: Now, go to the “forms/downloads” section.

Step 3: Now, click on the “Income Tax Forms” tab and choose form 16 option from the “Frequently Used Forms” section.

Step 4: Now, select the financial year for which you want to download Form 16.

Step 5: Now, you can select the format option of this form 16 which is available in fillable form and PDF form. 

Step 6: On the next window, the form 16 will be downloadable.

Steps to Download Form 16 from TRACES

Alternatively, you can download Form 16 from TRACES (Tax Deduction and Collection Account Number System) portal by following these steps:
Step 1: Visit the official TRACES website
Step 2: Now, click on the 'Login' button on the left side of the homepage.
Step 3: Enter your PAN number and password then click on the login button on the same page.
Step 4: Click on the 'Downloads' tab and then select the 'Form 16' option.
Step 5: Select the financial year for which you want to download Form 16 and then click on the 'Download' button to download Form 16 successfully.

What are the Benefits of Form 16?

Several benefits are offered by Form 16 to the employers as well as the employees. Let’s take a look at the major benefits of form 16 listed below:

Serves as an Income Proof

Form 16 serves as a proof of income and therefore, individuals can use it at the time of applying for loans, visas and insurance policies.

Supports Tax Refund Claim

A taxpayer can claim for tax refund in case the TDS amount deducted is more than the actual tax liability. To support the claim for tax refund, form 16 is mandatory as it serves as an evidence.

Ensures Accuracy in ITR Filing

Crucial details required to file your ITR on the Income Tax Portal are mentioned within Form 16 accurately. Hence, discrepancies are reduced at the time of filing ITR.

Serves as a Proof of Compliance with IT Act 1969

Form 16 serves a proof that the taxpayer has complied with the IT Act’s provisions. This is crucial in case of any scrutinization done by ITD. The employee’s salary and deductions can be tracked using this form.

Helps to Detect Errors in TDS Deducted

In case you feel like there are errors in TDS deducted, they can be detected by comparing the details in Form 16 with the salary slip details.

Conclusion

Form 16 is an important document for the individuals who receive salary. This document helps the salaried individuals to file their income tax return and also comes in handy at the time of applying for loan, insurance and visa to travel abroad. In case you have not received form 16 from your employer, you can ask him for it. It is the employer’s responsibility to issue form 16 as it serves as proof that he has deducted TDS from your salary and submitted it with the Income Tax Department.

Form 16 is crucial at the time of ITR filing. The due date for ITR filing is 31st July. If you need Registrationwala’s assistance in ITR filing, don’t hesitate to get in touch with us. We’ll ensure that your process of ITR filing is smooth.

Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.