What is Form 16 & How to Download Form 16?

What is Form 16?

Form 16 is a certificate issued under Section 203 of the Income Tax Act 1961. It outlines the salary income earned by an employee and the taxes deducted from their salary by the employer. It ensures that the employer successfully submits the TDS to the Income Tax Department.

Simply put, Form 16 is a certificate that provides a detailed summary of the following heads in a particular financial year (typically from April to March): 

• Salary earned by an employee

• Allowances

• Deductions

• Taxes paid on the employee's behalf

The Form 16 serves as evidence of the TDS (Tax Deducted at Source) and other crucial information of your income for filing an Income Tax Return (ITR).

It plays a vital role during the income tax return filing process. It enables you to accurately report your income and deductions and claim eligible tax refunds from the Income Tax Department.

Download Form 16 Here: https://assets1.cleartax-cdn.com/cleartax/images/1655725194_sampleform16.pdf

Features of Form 16

Form 16 is a document issued under the Income Tax Act of India, and it acts as proof of Tax Deduction at Source (TDS) by an employer.

The key features of Form 16 are as follows:

Components of Form 16

Form 16, also known as the salary TDS certificate, has two parts:

• Part A: This section includes details of the employer and the employee, such as their names, addresses, and Permanent Account Number (PAN). It also contains information on the tax deducted and deposited with the government.

• Part B: Form 16 provides a comprehensive summary of the employee's salary, allowances, deductions, and net taxable income. It also includes information on other sources of income, if any, and tax computations.

Let us learn the particular details about both parts of Form 16 in the next sections.

Points to Remember to Fill Form 16 (Part- A & Part- B)

• An employer can download Part A and Part B of Form 16 through the TRACES portal

• If an employee has switched his job in one financial year, he would require Form 16 A for each employer for different periods of employment

• Both the parts must have the TRACES logo to ensure that they are downloaded from the Income Tax Department portal

What is Form 16 A?

Part- A of Form 16 comprises details regarding the TDS deducted from salary in every quarter. 

Details of Form 16 A:

• Employee's Name and Address

• Employer's Name and Address

• Employee's Permanent Account Number (PAN)

• Employer's PAN

• Employer's Tax Deduction Account Number (TAN)

• Assessment Year: The year your tax is calculated from the income you earned in the previous year

• For Example: If the financial year is 2015-16, then the assessment year is 2016-17

• Period of Employment

• Details of Net Income: 

  • Gross salary

  • Incentives/ Perks

  • Deductions

  • Net salary

• Tax Deduction at Source (TDS) Summary from Employee's Salary: 

  • TDS amount

  • Date of deduction

  • Date of deposit with the government

  • Challan Identification Number (CIN): The unique ID number of the challan used by the employer to deposit the TDS with the government

What is Form 16 B?

Part B of Form 16 is an Annexure to Part A, furnishing details like your salary breakup, tax deductions allowed under Chapter IV A, tax paid, tax dues, and other income, if any.

The details of the Form 16B are to be prepared by the employer for its employees. 

Details of Form 16 B:

• Employee's Gross Salary Components: 

  • Basic salary

  • House rent allowance

  • Transport allowance

  • Perquisites, etc.

• Deductions under Chapter VI-A:

  • Exemptions u/ Section 80 C (for investments in specified instruments like Provident Fund, Life Insurance Premium, etc.)

  • Section 80CCD

  • Section 80D (health insurance premium)

  • Section 80E (interest on any education loan)

  • Section 80 G (for donations to specific funds)

• Total Income: Provides an overview of the income on which taxes are calculated

• Cess and surcharge details

• Total tax payable and the amount of TDS deducted by the employer

• Tax Deducted and Deposited: Summary of the TDS deducted from the employee's salary

• Verification and Certification: A declaration by the employer certifying the accuracy and authenticity of the information provided in Part B of the form

Important Terms in Form 16

Eligibility Criteria for Form 16

Form 16 is to be filled as per the IT Act, 1961 regulations if the following eligibility conditions are fulfilled:

How to Download Form 16 for Salaried Employees?

You can access the Form 16 from the following options:

1. Your Employer:

   • Issues Form 16 for the current financial year (FY 2022-23) to the employee

   • Your employer is responsible for providing you with Form 16

2. If You Left the Job: 

   Even if you have left your job, you can reach out to your employer's HR or finance department and request Form 16.

How to Download Form 16 by an Employer?

Only the employer can download the form in the following two ways:

• E-filing Portal of Income Tax Department

• TRACES website

These forms are available in fillable or PDF format, which can be printed for access to hard copy.

How to Get Form 16 Online?

The steps to Form 16 download from the Income Tax Department by an employer are as follows:

1. From the e-filing portal of the Income Tax Department 

   Step 1: Visit the Income Tax Department Website- https://www.incometaxindia.gov.in/Pages/default.aspx

   Step 2: Go to the "Forms/Downloads" section

   Step 3: Click the "Income Tax Forms" tab

   Step 4: Choose the "Form 16" option from the "Frequently Used Forms" section

   Step 5: Select the financial year for which you want to download Form 16.

   Step 6: Select from the appropriate format option of "PDF" or "Fillable Form" available under Form 16

   The form will be downloadable on the next window.

2. From the TRACES (Tax Deduction and Collection Account Number System) portal

   Step 1: Go to the TRACES website

   Step 2: Click on the 'Login' button.

   Step 3: Enter your PAN number and password.

   Step 4: Click on the 'Downloads' tab.

   Step 5: Select the 'Form 16' option.

   Step 6: Select the financial year for which you want to download Form 16.

   Step 7: Click on the 'Download' button.

What are the Important Points to Check in Form 16?

You should keep the following points in mind once you get Form 16 from your employer:

• Upon receiving Form 16 from the employer, it is important to check for the accuracy of the filled data.

• Verify personal details, income amount, and TDS deductions in Form 16.

• If any information is incorrect, contact the HR/Payroll/Finance department of your organization for correction.

• The employer will rectify the error by filing a revised TDS return to allocate the correct TDS to your PAN.

• Once the revised TDS return is processed, you will receive an updated Form 16 from your employer.

Difference Between Form 16, Form 16A, and Form 16B

The important details that differentiate Form 16, Form 16A, and Form 16B are shown below:

What are the Advantages of Form 16?

Form 16 offers several advantages to both employees and employers, some of which are mentioned below:

• Proof of income: Form 16 can be used for various purposes, such as applying for loans, visas, and passports.

• Accuracy in filing income tax returns: Form 16 contains all the details required to accurately file your ITR on the e-filing 2.0 portal.

• Claiming refunds: If the amount of TDS deducted is more than the actual tax liability, the taxpayer can claim a refund. Form 16 is required to support the claim for a refund.

• Reconciliation of TDS: Form 16 can be used to reconcile the TDS deducted with the amount of TDS mentioned in Form 26AS. This helps to ensure that the TDS has been correctly deposited with the Income Tax Department.

• Detection of errors: If there are any errors in the TDS deducted, they can be detected by comparing the details in Form 16 with the details in the salary slips.

• Proof of tax compliance: Form 16 is proof that the taxpayer has complied with the provisions of the Income Tax Act. This can be helpful in case of any scrutiny by the Income Tax Department.

In addition to the above, Form 16 is also a useful document for tracking the employee's salary and deductions over the years. This information can be used for various purposes, such as planning for retirement or applying for higher education loans.

Wrapping It Up!

Form 16 is a very important and useful document. It does not just help you file your income tax returns but also comes in handy when applying for any loans, term insurance, and more. As soon as you receive your Form 16 from your employer, make sure to save a copy.