Form 16 for Salaried Employees

Form 16 for Salaried Employees

If you are a salaried employee, then you must read this article till the end! Here, we are going to explain everything about Form 16.

 Let’s begin!

What is Form 16?

Form 16, often referred to as a TDS certificate, outlines the salary earned and the TDS deducted from that salary over the financial year. Employers are required to issue this certificate to the employees by June 15th of each year, following the close of the financial year in which the income was earned.

It’s both the employer's and employees' responsibility to provide and receive the Form 16 timely. This document is essential for filing ITR (income tax returns) for salaried individuals, as it contains comprehensive details of your earnings and the taxes deducted.

Now, Form 16 is divided into two main sections: Part A and Part B.

Let’s have a look at these in detail!

Part A of Form 16

Part A of Form 16 provides information about the TDS deducted and deposited by the company or employer on behalf of the employee. Here’s what it entails.

●     Name and address of the employer

●     Employee's details: Name, address, PAN (Permanent Account Number)

●     TAN (Tax Deduction and Collection Account Number) and PAN (Permanent Account Number) of the employer

●     Quarterly summary of salary payments

●     Summary of tax deducted and deposited

Part B of Form 16

Part B of Form 16 is an annexure to Part A and is prepared by the employer. Here’s what it includes.

●     Detailed salary breakup: This includes the components of the employee’s total salary.

●     Breakup of exempted allowances under Section 10 of the Income Tax Act: This section lists the allowances that are exempt from tax.

●     Deductions allowed under Chapter VI-A: These deductions reduce your taxable income. Some common deductions are:

1)    Section 80C: Deductions for life insurance premiums, PPF contributions, and other specified investments.

2)    Section 80CCC: Deductions for contributions to pension funds.

3)    Section 80CCD(1): Deductions for employee contributions to pension schemes.

4)    Section 80CCD(1B): Deductions for self-contributions to notified pension schemes.

5)    Section 80CCD(2): Deductions for employer contributions to pension schemes.

6)    Section 80D: Health insurance premiums Deductions.

7)    Section 80E: Deductions for interest paid on education loans.

8)    Section 80G: Deductions for donations to NGOs or charitable organizations.

9)    Section 80TTA: Deductions for interest income on savings accounts.

●     Any relief under Section 89 of the Income Tax Act: Tax Calculation, surcharge, education, and health cess.

Why Form 16 is Needed?

Form 16 is an essential document for several reasons:

●     It serves as evidence that your employer has deducted tax from your salary.

●     Banks and lenders often ask for Form 16 when you apply for loans.

●     This certificate is crucial when applying for a visa.

●     It may be required when switching jobs and is mandatory for onboarding in some organizations.

●     It helps you when filing your income tax returns online.

Eligibility Criteria for Form 16?

If we have to answer this in one line, then it would be

Every salaried employee whose income falls within the taxable range is eligible to receive Form 16. 

If an employee's income does not reach the taxable threshold, Tax Deducted at Source (TDS) is not applicable. However, companies now provide Form 16 to all employees as a standard practice, even if their income is below the taxable limit. Because this document offers a comprehensive overview of the employee's earnings and serves multiple additional purposes.

How to Download Form 16?

Here’s a step by step procedure to download Form 16.

●     Access the TRACES portal: Visit the official TRACES website to begin the process.

●     Log in or sign up: Sign up if you don’t have an account. If you already have an account, log in using your PAN (User ID) and Password.

●     Go to the ‘Downloads’ section: Once logged in, click on the ‘Downloads’ tab and choose ‘Form 16.’

●     Select the Form type and year: Select the Form type and the financial year you need.

●     Confirm details: Verify the PAN and other required details.

●     Enter TDS information: Provide the TDS receipt number and the date when the TDS was deposited.

●     Input tax details: Enter the total amount of tax that was deducted and collected.

●     Submit the request: Click on the submit button to process your request for Form 16.

●     Download the form: After processing, go to the ‘Downloads’ tab to retrieve and download your Form 16.

By following the above steps, you can easily download Form 16 from the TRACES platform.

Frequently Asked Questions (FAQs)

1.     Are Form 16 and Form 16A the same?

No, they are not the same. Form 16 is for salaried individuals and shows TDS on salary. On the other hand, Form 16A is applicable for TDS on ‘Income Other than Salary.’ For instance, rent, commission, professional charges, etc.

2.     When will Form 16 be available for FY 2023-24?

Form 16 is usually issued by employers by June 15th, after the end of the financial year. So, for FY 2023-24, it should be available by June 15, 2024.

3.     What is the importance of Form 16?

Form 16 is important because it serves as proof of income and TDS for salaried employees. It helps in filing income tax returns, verifying income, and calculating tax liability.

4.     What should I do if there are errors in Form 16?

If you find errors in your Form 16, you should immediately contact your employer to get it corrected. If your concerns prove valid, the company will be required to correct their end by filing a revised TDS return. Once the revised TDS return is processed, the employer will issue a revised Form 16 with the correct details.

5.     TDS is not deducted from my income. Is the employer required to issue a Form 16?

A TDS certificate is only issued when TDS has been deducted. Otherwise, the employee may or may not receive Form 16, as it totally depends on the employer.

6.     What if I don’t receive Form 16?

If you do not receive Form 16, contact your employer. They are responsible for providing it if TDS was deducted from your salary. You can also check your Form 26AS on the Income Tax Department's website for details on TDS.

7.     Can I file my ITR without Form 16?

Yes, you can file your ITR or income tax return without Form 16. Although it’s not mandatory but, having this form will help you with the correct return filling as it comes with proper salary details and TDS deducted.

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