What is Form 16? Here's All You Need To Know About Form 16

Form 16 is one of the most important documents that you need for filing an income tax return. It is a certificate that employers issue to their employees under section 203 of the income tax act. Issuing form 16 means that TDS has been deducted and deposited to the income tax department on behalf of the employee. Form 16 contains the information that you need to prepare and file your tax return.

Employers must issue it every year on or before June 15 of the next year and immediately after the financial year in which the tax is deducted.

The government has relaxed various tax-related deadlines including the issue of Form 16. It has extended several other tax-deadlines for the financial year 2019-20 by issuing a notification on 24 June. The date for furnishing of form 16 TDS/TCS statements has been extended to 31st July 2020. Earlier, the last date used to be 15th June of every year.

Employers could issue Form 16 till August 15, this financial year. The last date for filing of income tax has been extended to November 30. The extension has been given because of the coronavirus crisis. So, those employers who have filed their TDS return late might have been delayed in issuing Form 16.

For the FY 2019-20, July 31 was the last date to complete your tax-saving exercise. This means that you got an extra month to save your taxes by investing in health insurance, life insurance, NSC, ELSS, PPF, etc.

Those people who have not been able to do their tax-saving investments will find these extensions useful.

Form 16 also shows any additional income if it has been reported by the employee and any deductions to reduce tax liability.

Components of Form 16

Form 16 has two components-form 16 Part A and form 16 Part B. If you lose your Form 16, you can ask your employer to give you a duplicate. If you happen to change your job within the financial year, you will get a separate  Form 16 a, for the period of employment, from the respective employers.

The components of Form 16 A are:

1. Name and address of the employer.
2. PAN ( Permanent Account Number ) and TAN of the employer.
3. PAN of the employee.
4. The employer certifies the summary of tax deducted and deposited quarterly.

Part B is an annexure to Part A. If you happen to switch jobs within the financial year, then it is your decision whether to take Part B from both the employers or only the last employer.

The components of Part B are:

1. Detailed salary breakup.
2. The breakup of exempted allowances permissible under Section 10.
3. Deductions allowed under the Income Tax act such as Section 80 C and 80D availed by the employee.
   If an individual loses income tax Form 16, he/she can request a duplicate to be issued by their employer.

Downloading form 16a can be easily done from the official site of the Income Tax department: Income Tax India website. Here you will get form 16 pdf.

While the onus of deducting tax on salaries and providing Form 16 is on the employer, the duty of paying tax and filing returns falls on the employee. If your income from all sources falls above the minimum tax slab, then you are required to pay tax. It does not matter whether your employer has deducted TDS or has not issued you a Form 16.

Taxpayers look forward to receiving their Form 16 and complete their tax filing so that they can get refunds in time. When an employee files his Income Tax return, he can know how much tax has been paid, and what is due, through Form 16.

Form 16 is not to be filled up by the employee. It is pre-filled based on an employee’s income during the year, and the tax deducted. An employer generates it from the TRACES software, which is a tool of the Income Tax Department. An employee can check Form 16 details or entries such as allowances, perquisites, or other income and deductions as reported by him. The employer can rectify if there is any incorrect figure.

The format of Form 16 has changed in the last year. You have to mention all allowances and perquisites in a detailed format along with Standard Deductions.

An employee’s TDS gets deducted each month from his income.

The download of Form 16 online can be done in the following steps:

1. Deductor logs in to TRACES.
2. Go to the Downloads tab.
3. Select Form 16/16A.
4. Enter the details and click on go.

Clear your tax dues in time

Salaried individuals, please take note! If all your incomes have not been accounted for in Form 16, the differences between tax paid and tax payable will crop up later. At the time of filing returns, you will have to clear all your tax dues. Suppose your self-assessment tax dues are over rupees one lakh. Then you will have to pay an additional interest of one percent per month. This will be levied from August 1, 2020, till the month of filing return.

How to generate TRACES Form 16 part A?

Step 1: Login to TRACES website by entering the user ID, password, TAN, and verification code.

Step 2: The status of your return 24Q4 for the desired financial year should be then checked.

Step 3: Under the “Downloads” tab, you will find the option for Form 16. Click on it.

Step 4: Select the correct financial year of which you want to generate form 16 part A. Find the download option “ Search PAN download ”, and click “Go”.

Form 16 is a very important certificate containing all the information one needs to file the income tax return (ITR). It is issued by the employer and provide details of TDS/TCS for various transactions between employer and taxpayer. We hope that the above article will clear all doubts in the reader’s mind about this essential document.

Also read:
What Is a Universal Account Number? How to get your UAN?
Everything You Need to Know About PPF Account: Benefits & Features
Read about the EPF Structure, Functions, Services, & Withdrawals
Presumptive Tax: Ways to File Returns & Save Taxes for Creative Professionals

FAQs

Q. I forgot to disclose some income that I had earned in the previous financial year. So, will I get a notice from the tax authorities?

Ans: Salaried individuals who rely on their Form 16 may forget to disclose certain income in the rush to file their tax returns. For example, it could be details of capital gains made, or fixed or savings deposit interest income. The income tax department can send you a notice if they detect this.

Q. Who is eligible for Form 16?

Ans: All salaried individuals who have a taxable income and tax has been deducted at source by the employer can get Form 16. The employer is not obliged to issue form 16 if the annual income of the employee is less than the basic exemption limit. But if the employer has deducted TDS monthly, then he has to issue it.

Q. Is Form 16 necessary for salaried individuals?

Ans: Form 16 is a certificate that carries details of income and TDS deducted during the financial year. If an employer has deducted TDS, then it becomes mandatory for him to provide Form 16 to the employee.