Form 16 is the certificate issued by the employer stating that the Tax Deducted at Source (TDS) has been deducted from the salary. As per the Indian Income Tax Law every employer is required to deduct TDS and issue GST Form 16 at on or before 31st May of the next year, which is following the assessment year when the tax is deducted.
Elements of Form 16
Form 16 can be divided into two parts, which are Part A and Part B.
Part A has the following information.
- Name and address of the employer who has deducted TDS of the employee
- TAN and PAN of the employer
- PAN of the employee
- Summary of tax deducted and deposited as per the stipulated frequency, which is certified by the employer
- Assessment year for which the TDS has been deducted
- Period of employment of employee with the employer
- Form 16 Part A has to be generated and downloaded through Traces Portal
- Moreover, Part A of the Form 16 has a unique TDS Certificate Number
Part B has the following information.
- Detailed salary breakup of the employee
- Deductions allowed under the Income Tax Act (under chapter VIA)
- Relief under section 89 of the Income Tax Act
- If the employee has more than one employer during the year, he should possess more than one Form 16 as TDS would have been deducted by every organization he was a part of.
- Part B is prepared manually by the employer and issued along with Part A
Requirement of Form 16
Form 16 is required while filing income tax return. The following details would be required when an employee is filing the return.
- Taxable salary
Form 16 provides the taxable salary and the tax which has been deducted from the salary. This information is required while filing returns.
- Breakup of Section 80C deductions
Form 16 provides information on the investments which the employee has made and the deductions due to the same.
- Aggregate of Section 80C deductions
Form 16 provides Gross and Deductible Amount from the taxable salary
- Tax Deducted at Source (TDS)
It gives information about the total tax which has been deducted post deductions
- Tax payable or refund due
Post deductions under 80C and tax payable if there is any tax which needs to be paid or if there is any refund, the information is present in Form 16
Form 16 is an important document/certificate from the tax point of view. The Employee should make sure that he possesses the Form 16 for each year and also the returns for each year are filed accordingly.