Almost every salaried individual must have heard of Form 16, which is an important document in the e-filing of income tax returns.
Form 16 is a certificate issued to an employee by their employer to validate that TDS (tax deducted at source) is deducted and deposited with the income tax department on the employee's behalf.
Here's everything you need to know about Form 16.
What exactly is Form 16?
As mentioned before, Form 16 is the TDS certificate issued by an employer. As per the Income Tax Act, when employers deduct TDS on salaries, they are required to issue a certificate in which details of the tax deducted and deposit is certified.
About the Part A of Form 16
Form 16 has two sections: Part A and Part B. Part A is generated and downloaded by the employer through the TRACES portal of the Income Tax Department.
Part A comprises components like the name and address of the employer and employee, PAN and TAN of the employer, PAN of the employee, and a summary of tax deducted/deposited that is certified by the employer.
What about Part B of Form 16?
Part B of Form 16 is just an annexure to Part A.
It contains details like the employee's salary breakup, other income sources declared by the employee, relief under Section 89, deductions claimed under the Income Tax Act Chapter VI A, the TDS and the net income tax payable by the employee, among others.
Is it mandatory for employers to issue Form 16?
One can collect their Form 16 from their employer, who has to issue it mandatorily if TDS has been deducted in the employee's salary. However, if the employer has not deducted TDS, then Form 16 may not be issued.
What details are required from Form 16 while filing ITR?
Individuals require certain details from Form 16 while filing their return such as taxable salary, breakup of Section 80C deductions, aggregate of Section 80C deductions (gross and deductible amount), TDS, and tax payable or refund due.
While filing annual return, individuals might require additional information from Form 16 like employer's TAN, PAN, name/address, apart from current Assessment Year and the taxpayer's name/address and PAN.