Form 16 is the most commonly heard form and if you are a salaried person, you should have received form 16 annually from your employer. In order to file your income tax returns each year, form 16 is the underlying premise that simplifies the return filing procedure.
In this article, we will help you understand your form 16 in detail, how to download it and use it to file your income tax returns.
What is Form 16?
It comes under section 203 of Income Tax Act, 1961 and is a certificate that gives information on the tax deducted at source (TDS) of your annual income. It presents all the details of the tax that is deducted by your employer and paid in advance. In simple terms, Form 16 is the salary or income certificate issued by your employer and contains all the details that will help the taxpayer to file their income tax returns with the income tax department.
Every employer should provide this form to their employees, as form 16 serves as an important proof of the tax paid. For employees who do not fall into the tax bracket, form 16 is not generally issued, as they do not have to pay taxes or file returns.
Understanding Form 16
Form 16, also known as salary TDS certificate has two parts to it. Part A serves as the proof of the tax deducted by the employer and contains all the TDS information. Part B is an annexure that furnishes further details like your total income, tax deductions, tax paid, due to tax and other income if any. Let us look at each part in detail.
Important Components of Form 16
Permanent Account Number or PAN is a unique alphanumeric code consisting of 10 digits, allocated to the individual tax payer
Tax Deduction and Collection Account Number that is allocated to every employer to facilitate tax payments to the government
Total salary paid to the employee including incentives, bonus and more
Tax Deducted at Source by the employer
Allowance disbursed by the employer like HRA (House Rent Allowance), Medical allowance, travel allowance, etc.
All deductions made under applicable Section
The final income or taxable income after all deductions that is subject to tax
Tax paid towards education development of the nation
Form 16 - Part A
- Basic details like Employee’s name and address, Employer’s name and address
- PAN – Permanent account number of the employee
- PAN and TAN (tax deduction account number) of your employer
- Assessment year – the year in which your tax is calculated from the income 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 your Salary – Gross salary, incentives or perks, deductions, net salary
- Summary of Total income and tax deduction throughout the year
Form 16- Part B
- Taxable salary of the employee
- All the applicable tax deductions and exemptions under Section 80 C (tax saving investments), 80CCC, 80 CCD, 80D ( health insurance premium), 80E (interest on any education loan), 80 G (donations) and others
- Aggregate of all the deduction amounts reduced from the taxable income
- Education cess and surcharge tax details
- Total tax payable and the amount of TDS deducted by the employer
- Gross total income, which will be the final amount on which your taxes will be calculated
- Tax Payable or Refund Due
How to Get the Form 16?
The document is typically issued by your employer for the current financial year and reflects the total earnings and income taxes applicable for that financial year. You can download the form from the online website of the Income Tax department as well. This form is available in the PDF format, which can be printed.
How to Download Form 16?
Your employer is responsible for providing you with the form 16. Even if you have left your job, you can get Form 16 from your employer. If for some reason, you don’t have it, you can download it using the following steps:
Step 1 - Visit the Income Tax Department Website - http://www.incometaxindia[dot]gov.in/Pages/tax-services/form-16A-download-deductor.aspx
Step 2 – Log in using your credentials
Step 3 – Go the Downloads Tab
Step 4 – Select the form – Form 16
Step 5 – For individual PANs, select the relevant financial year for which Form 16 is required, Enter your PAN number and click on Add. Click on Go to proceed
Step 5 – Click on Submit to Download Form 16
How to Fill Form 16?
- Name and Address of the Employer – Employer details
- Name and Address of the Employee – Employee details as per company records
- PAN of the deductor – Permanent Account Number of the Employer
- TAN of the deductor – Tax Deduction and Collection Account Number of the Employers
- PAN of the employee – Individual’s PAN number
- CIT (TDS) – Income tax commissioner details
- Assessment year and period – The relevant financial year
- Summary of tax deducted at source – Lists the quarter-wise details of the tax deducted at source along with the corresponding receipt numbers of the TDS
- Gross Salary – Total Salary without any deductions along with pre-requisites that you receive
- Allowance – The several allowances that your employer pays you, like house rent allowance, travel allowance and more.
- Income Chargeable under the Head of Salaries – The total income minus all allowances and deductions by the employers
- Gross total income – Any other income reported by employee is added, and the final salary amount on which the taxes will be computed is obtained
- Deductions under Chapter VI-A – All applicable deductions under Sections 80C, CCC, CCD, D, E, G
- Aggregate of Deductions – All deductions are summed up and final amount to deduct arrived at
- Total Income – The final income minus all the applicable tax deductions and exemptions is derived here
- Tax on Total Income – Final tax amount as per the income tax slabs and rates applied
- Education Cess at 3% - Educational tax surcharge added
- Tax Payable – Total tax payable
- Less Relief – Under Section 89 any reliefs according to furnished details, adjusted here
- Tax Payable – Final tax amount that is payable by the employee and deducted as TDS by employer
- Verification – Your Signature and consent for the TDS
Form 16 vs. Form 16A
While Form 16 is your salary certificate issued by the employer, Form 16 A is also a TDS certificate that is applicable for TDS on income other than salary. For example, form 16A is taken out by banks when they subtract TDS on the interest earned on any fixed deposits or recurring deposits bank accounts.
It also consists of the same details like Form 16 like your PAN number, TAN details along with income that is earned apart from your salary and the TDS deducted from such income.
Where is Form 16 Used For?
- Income Tax Returns - It is primarily used to file income tax returns. Since it contains all information with respect to the income and various tax deductions, it becomes an important source for the individual to file their income tax returns.
- Verification Purposes - One can also use Form 16 to verify the TDS deducted by the employer and the actual income tax collected by the Government. Form 26AS presents all the details of the total income tax collected and deposited with the Government. So, TDS deductions that are available in Form 16 and Form 16A can be cross-checked and verified using the actuals in Form 26AS. You can download the Form 26AS from the Income tax department’s online website, by logging in with your credentials.
Both Form 16 and Form 26AS will come in handy when filing your income tax returns. The TDS details in form 16, and the actual amount deposited with the Government in Form 26AS should match.
Most banks and financial institutions use Form 16 as part of their verification process when you apply for a loan of any kind like housing loan, educational loans, etc.
Multiple Form 16
In case you have switched your jobs in a single year, then you would have to obtain multiple form 16’s – one from your current employer and the other from previous employers.
It is recommended to submit your income from previous employment to your new employer so that all information can be assimilated in a single form 16. However, you would be required to declare your TDS deducted by current and previous employers in your income tax returns and pay tax accordingly.
If you have not disclosed such details, then you would have to file your income tax returns using multiple form 16s. You would have to consider both incomes together and pay tax accordingly.
Form 16 is a very important and useful document. It not just helps 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.