Form 16 is related to Income tax and is used by the companies to provide their salaried individuals’ information on the tax deducted. If you are wondering what Form 16 means, the simplest definition is, it’s a certificate provided by your employer which certifies the salary details earned during a particular year and how much TDS has been deducted. Form 16 is among the necessary forms for salaried individuals when it comes to taxation. It comprises all crucial information related to one’s salary and accumulated tax amount deducted by the issuer. What makes the said form so important is its role in filing ITR among others.
It is a certificate that contains vital information required to file income tax returns. An employer issues it every year on or before 15 June of the next year, immediately after the financial year in which the tax is getting deducted. This certificate is issued according to Section 203 of the Income Tax Act 1961.
Form 16 is also known as a salary TDS certificate and comprises details related to the salary paid by an employer to an employee in a given fiscal year. It also has the details of the income tax that has been deducted from the salary of the individual in question. Suppose, the income from your salary for a financial year is more than the basic exemption limit of Rs. 2, 50, 000, then your employer is required to deduct TDS on your salary and deposit it with the government.
Those who have worked with more than one employer at the same time or have changed jobs in a financial year will receive Form 16 from all the employers. It must be noted that it is not issued to that employee whose income for a particular year is below the threshold of tax exemption with no provision for TDS.
The task of downloading Form 16 is limited to employers. Contrary to popular belief, salaried individuals cannot download their form using their PAN at the TRACES website. All employers must issue this form every year to eligible employees before May 31st of a financial year. Follow the below-given steps to download Form A:
In a broader sense, Form 16 is divided into 2 distinct parts, namely –part A and part B. Both the components are discussed in details below –
This particular part offers a record of the tax collected by the individual’s employer or organisation from his/her salary income and is subsequently deposited to the government’s account. It is more like a certificate that is signed by the employers stating that they have deducted TDS from an employee’s salary and have deposited the amount with the IT department.
The primary components of part A of Form 16 include these details –
Part A of Form 16 can be generated and downloaded through the IT department’s TRACES portal. Notably, the deductor must sign all the pages of this form’s part A.
Form 16B is an annexure to Part A of form 16. In case you switch jobs in the same financial year, you need to decide if you want Part B of the form from the last employer or from both previous and current employer.
The components of Form 16B are enlisted below:
Salaried individuals whose annual income is included under the taxable slabs are eligible for Form 16. Regardless, an employee must issue Form 16 to an employee if he/she has deducted tax at source from salary. The said form comes in handy for salaried employees and helps them to file an ITR when they have no other income source other than their salary.
These points below highlight the importance of income tax Form 16 for employees –
You can take the reference from the image shared above and get some information for filing your income tax return for FY 2020-21 (AY 2021-22). These details from the said Form no 16 online are used to file ITR –
|Type of Form||Form 16||Form 16A||Form 16B|
|Purpose of issuance||It is issued for TDS on salary.||It is issued for TDS on any earnings that are generated outside salary income like – returns on investment or FD, rent, etc.||It is issued for TDS on income generated through the sale of immovable assets or property.|
|Issuer||Form 16 issued by an employer.||Tenants, financial institutions and others issue Form 16A.||A property buyer issues Form 16B to the property seller.|
In any case, if an employer does not issue Form 16 to an employee, he/she may reach out to the concerned authority for redressal. Nonetheless, individuals can use an alternate document like Form 26AS, TDS certificate from a financial institution, etc. to file ITR if they fail to receive income tax Form 16 from their employer.
Ques. How to obtain Form 16?
Ans. Form 16 can be obtained by your employer. Even if you are not doing the same job, your employer will provide it. One thing to keep in mind is this Form cannot be downloaded from anywhere.
Ques. Is Form 16 issued by the employer even if there is no TDS deduction?
Ans. TDS certificate in Form 16 is generally issued when there has been a TDS deduction. In case there is no TDS deduction by the employer, you might not be provided with Form 16.
Ques. Will I get a certificate if TDS has been deducted by my employer?
Ans. Any individual who is paying out salaries is required to deduct TDS before making the payment. As per the Income Tax Act, every person who deducts TDS from payment is required to provide a certificate with the details of TDS deducted & deposited. If it’s an employer in specific, it’s mandatory to furnish a certificate in the format of Form 16.
Ques. What is the difference between Form 16 and Form 16A?
Ans. Form-16: It’s a Certificate for TDS from the income that is deducted from the salary.
Form-16A: It’s a certificate Tax Deducted at Source for income apart from the Salary.