Tips for Startups while Generating Form 16

A startup requires efficiency and handling power from the authorities in almost all the departments of the firm, and most importantly, handling the employees of the company well. A start up can be very complicated at times. We understand the pain that you might go through. Since everything is happening for the first time, it is obvious that you do not have any prior experience about it.

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So many different department and their different way of way of functioning, there is so much to take care of. But you do not have to worry, as we are here to help you.

One of the most important aspect of a startup is its legality. Until the firm calls itself a startup, it's all fun and games. But a startup is a stage where everything needs to be taken care of in a professional and legal way. That is when, the filing of form 16 comes into picture.

First of all, before getting any ahead with this article, we want to first make the meaning of the form very clear to you. Before learning to file for it, you have to know what exactly the form refers to.

Form 16

Form 16 is a form that is issued by the income tax department of our country for the benefit of the employees. However, the form is filled by an employer. The form required an employer to fill the form in name of their employee mentioning the amount that they deduct from their salary as tax so that the employee doesn't have to pay any tax further. This is very simple and basic.

The employees pay their tax already by receiving deducted income and the employer needs to inform the income tax department about it. That is all form 16 is about.

Why you should File Form 16

Form 16 is extremely important and here are few reasons why,

  • it is a must if you are Hiring individuals and pay them an annual amount that is taxable.
  • Once you fill the form 16, your employees tax record would be completely clear and no further investigation would be required.
  • Also, through filing of this form, you are saving your employees from a lot of trouble which will make your employees more dedicated and loyal.
  • For startups, form 16 helps creating a stronger legal base of the firm which is very much needed in a start up.

The form 16 has two parts to it. Part A and part B. You go through part B first and later move on to part A. The process includes submission of various documents in a proper order to be able to file the form .

Here are little tables explaining both the parts in a better way.


List of documents required

Part A

Name and address of the employer

Assessment year details

Pan number of the employee

Information like the pan as well tan of the employer.

A downloaded form of form 16 from the actual traces online portal

Period details from which the employee was hired by the employer.

A properly generated official summary of the taxes deducted and deposited by the employer to the concerned authority.

A properly accumulated copy of all the other relevant documents that could be needed.

Part B

A detailed break down of the salary that the employer has paid to the employee through out the annual period of the taxable year.

A copy of the deduction that is allowed to the company under the income tax regulations.

If the company has opted for any relief under the section 89, that must be mentioned.

Prepared by the employer manually, including all the documents required and submitting it along the copy of the part A that is to be submitted prior.


This was a little run through on the flow of how the form must be filed. The form definitely has a lot of legal documents that has to be submitted, however, it is only to insure complete proof as well as to avoid any other inconvenience if you are an employee and have worked in two places during the year, you are likely to have two forms filed in your name. The documents mentioned above are mandatory to be submitted and without it the submission of the form would not be possible.

It is so great that off late, the government has given the employers an allowance to file the form even through their online portal. Besides the official portal, a lot of other websites also offer such facilities to file the form. All you have to do is get all your documents ready, scan them and then upload the completed file on the online portal. Its as easy as that. However, we as experts definitely suggest you to take suggestions from a law professional to insure that the work is done with utmost caution and perfection.

Startups and Form 16

Our point is, wouldn't a startup find it difficult to file form 16? Startup is barely legally aware. There is minimal documentation that a start up firm does. It is not in a stage where they can afford a lot of legal advisors or to file several legal aids.

That is exactly why they are called a startup, since these are firms that have just started and have not had the time to put everything into place. So how can start up go all out and file a form with the income tax department.

Sometimes a startup does not even have as many employees as a normal firm would, then how would it be allowed to file a form in the income tax department? Most importantly, is it even possible for small scale startup companies to file the form 16?  We would like to answer that question.

Firstly, the most important information that we can give to you is that our government allows you to file the form online without any hassle of collecting a form or submitting it. So it doesn't matter that you are a startup of a huge firm, you can avail this facility and file for the form online with proper documents.


According to us, Some of the most important things that must be kept in mind while filing the form 16 are,

  • your company may be a startup, but it must be registered properly and must have legal assurance to it to be able to file this particular form.
  • Your employees salary should be taxable and only those employees salary should be deducted.
  • You must have proper documents of the tax that you Deducted from the employees salary and it should be forwarded to the income tax department from your end.
  • You must have a proper legal department looking after your legal affairs. Even if you are a startup, you must have access to a professional lawyer and suggestions must be taken by them only.
  • You must make sure that the companies income tax record is clear as well.
  • You must have all the documents mentioned both in part A and part B without fail.

Form 16 is made for the benefit of the people themselves. It's basically curated to assure that there are no issues or excess deduction from any individual’s income. No one would want to pay more money as tax that they are supposed to. Of course, as good citizens it is our responsibility but make sure that we never overlook our income tax payments and make sure that we pay it on time, however to pay more than the required amount is just a very silly process.

Also, if an individual is working for a company, he or she would expect that their company would insure that all their tax records are clear. When working for a firm, employees do not want to go here and there wanting to pay their income tax In the middle of their busy schedule. Thus they expect that their employer should be efficient enough and take care of such matters of their employee.

This is helpful not just to keep a clear record of the companies income tax payments but also to make a good rapport with your employees. Taking care of the employees matters and taking away their burden would make the employees more focused and more productive insuring that they are going to be extremely profitable for the company. This also insures complete employee loyalty.

Income tax is to be given according to what you earn. And if the company already is collecting the prescribed amount of money from a person’s paycheck, then the firm has to insure that the employee does not end up paying more income tax than required.

We strongly believe, that no matter how big or small a company is, form 16 should always be filed by the employer. This process involves complete transparency and insures that all the money is in its proper hands.

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