FORM 16 – A detailed analysis.
Table of Contents
What is Form -16?
Form 16 is a certificate that the employer provides to the employee. It contains the details of the tax deducted (TDS) amount by the employer on the salary income during the financial year. Now, such TDS is deposited to the government.
In addition to the tax amount, Form 16 also includes details of income earned and various deductions availed by the employee.
Form 16 has two parts that contain various details as below:
Ø Form 16 Part A – Details related to the tax collected and deposited
- Personal information – Name, address, PAN of the employer and employee, and TAN of the employer.
- Assessment year
- Time period, i.e., Financial year in which employee was employed in the organization.
- Summary of salary paid and tax deducted & deposited to the government.
- The date on which tax was deducted and deposited
- Acknowledgment number of the TDS payment
Ø Form 16 Part B – Details related to the other incomes disclosed by the employee
- Salary received during a financial year.
- Exemptions allowed as per section 10 of the Income-tax Act, 1961
- Deductions allowed under chapter VI A of the Income-tax act, 1961, i.e., 80C/80CCC/80CCC/80D/80E, etc.
- Gross income – the sum of the total salary received and other incomes of the employee
- Net taxable salary – Amount on which tax liability is calculated after allowed exemptions and deductions
Importance of Form 16 for a salaried individual
- Form 16 serves as evidence that the employer has deposited the tax to the government.
- It also helps in filing an income tax return as all the income and investment details are already contained in Form 16.
- The employee can also use Form 16 for availing of the loan.
Eligibility criteria for Form 16 for the salaried individuals
Following salaried employees are eligible to receive Form 16 from their employers:
- Having taxable income, and
- The tax has been deducted at the source
Note: If an employer has an annual income less than the basic exemption limit, then the employer is not under the obligation to provide Form 16. However, an employee can ask to issue Form 16.
Difference between Form 16, Form 16A, and Form 16B
Form 16, Form 16A and Form 16B are the different certificates issued for various purposes.
Basis of differences | Form 16 | Form 16A | Form 16B |
Who issues | Form 16 is issued by the employer to the salaried employees | Form 16A is issued by financial institutions or entities. | Form 16B is issued by the buyer to the seller. |
Purpose of issuance | To deduct TDS on salary income | To deduct TDS on income other than salary such as interest on fixed deposits, rent, etc. | To deduct TDS on income earned through the sale of immovable property. |
How to download Form 16? – Steps to generate Form 16
1. Login at the TRACES website https://contents.tdscpc.gov.in/ by using the User ID, password, TAN of the deductor, and verification code.
2. Go to the “Download” Tab and select Form 16/16A/16B
3. Select the financial year for which you want to download the form. Here you have two options
Search PAN download – If you wish to download Form 16 Part A of a PAN.
Bulk PAN downloads: If you want to download Form 16 of all PAN’s.
4. Now, click on the “Submit” button to proceed further.
5. Enter the token number of the original statement based on the latest statement filed by you. After entering the details, you will get an authentication code.
6. On submitting, the system will generate a unique request number. One can use that to track the request status.
7. After completion of the request (usually takes 24-48 hours), form 16 Part A will be available under the “Requested download” tab. Deductor can download Form 16 by using either of the options, i.e., “HTTP download (prefer to download small files)” or Download manager (to download large files).”