As tax season approaches, Form 16 becomes an indispensable tool for the salaried, ensuring they have all the necessary details for tax filing.
A certificate issued under Section 203 of the Income tax Act for tax deducted at source (TDS) from salary income, employers and firms issue Form 16 after deducting tax from an employee’s salary and depositing it with the government. This certificate gives a detailed summary of the salary paid and the TDS deducted. It is issued annually, typically after the end of the financial year.
Employers must provide Form 16 to their employees. Employees can use it to fill out their income tax returns (ITR) and keep it as proof of TDS.
Form 16 consists of two parts: Part A and Part B.
What is Part A of Form 16?
Part A of Form 16 details the tax deducted at source (TDS) from salary. Employers generate and download it from the TRACES portal. It includes:
- Employer’s name and address
- Employer’s PAN (Permanent Account Number) and TAN
- Employee’s PAN
- Summary of the amount paid/credited and TDS deducted for the employee
What is Part B of Form 16?
Part B is an annexure to Part A and must be issued by the employer. It includes:
- Detailed salary breakup
- Allowances exempt under Section 10
- Deductions allowed under Chapter VI-A of the Income Tax Act
- Relief under Section 89
Working for one or more employers?
If you worked for one employer during the year, they will issue you a single Form 16 for the entire financial year. This form will include details of all tax deductions and deposits for each quarter.
If you worked for multiple employers during the year, each employer will issue a Form 16 for the period you were employed with them. Part B of Form 16 can be issued by each employer or just the last employer, depending on your preference.
According to current rules, employers must issue Form 16 by June 15 each year. It is mandatory for employers to provide Form 16 if they have deducted TDS from your salary. If an employer delays or fails to issue Form 16 by the deadline, they face a penalty of Rs 100 per day until the form is issued, up to the amount of tax deducted.