What is Form 16?
Every individual earning a monthly salary is entitled to receive Form number 16 from his/ her employer. If you are a salaried individual, you will receive Form 16 from your employer before 31st May 2021. Form 16 is a certificate that certifies that TDS has been deducted from your salary by your employer and provides you with all the information required for filing your Income Tax return.
Different Parts of Form 16
|Part A||Details of TDS deducted on income.|
|Part B||Details of components of salary, tax due, tax paid|
PART A of Form 16, 2021
Part A of Form number 16 provides the amount and details of tax deducted from your income and deposited to the government as per monthly and quarterly tax deducted at source(TDS) filed by your employer. It includes:
- Your personal details like name, location and PAN number
- Details of your employer such as the name of the firm, TAN number and PAN of your employer
- Amount of TDS deducted and deposited quarterly along with other details including date of deposit, BSR code of the bank branch through which tax is deposited, challan serial number relating to each amount of tax deposited by your employer.
- Assessment year
- Your time of job at your current company
How to Download Form 16 Part A
Employers can generate and download Part A of Form number 16 by following the below-mentioned procedure.
- Firstly, visit the portal of TRACES.
- Log in to the gateway entering your login ID and password.
- Under the downloads tab, you can find Form 16 A.
- Finally, fill in the required details. It contains the following information.
- Name and Address of the Employer.
- Name and Address of the Employee.
- PAN and TAN of the borrower/employer.
- PAN of Employee.
- Amount paid/credited.
- Tax deducted at source.
PART B of Form No. 16, 2021
Part B is an annexure to Form number 16, which includes details and components of salary paid, tax due and tax paid. It is a detailed computation and a systematic record of your taxable salary after allowed deductions and exemptions. Form number 16 Part B includes the following information:
- Gross Salary as broken into basic salary, Dearness Allowance, House rent allowance(HRA), Medical allowances, provident fund contribution by both employer and employee, leave travel concession, professional tax (if any), transport allowance, and others.
- Under section 10 of the Income Tax act, spared endowments include conveyance allowance, house rent allowance, children allowance, medical allowance, etc.
- Deductions allowed under chapter VI-A of the Income Tax Act
- Amount of tax due or paid on income
- The form will also showcase the amount of tax refund if excess tax has been paid.
Why is Form 16 needed?
- Form number 16 is a detailed record of your salary and tax paid by your employer. You require Form 16 at the time of filing your income tax return.
- Form number 16 is also accepted as income proof in various transactions such as loan processing.
- Form number 16 can also be used to verify whether correct taxes have been deposited with the government account by comparing the same with your Form 26AS.
Form 16 Eligibility
As per the regulations by the Indian government, each salaried individual within the taxable income bracket is eligible for Form number 16. Thus, if your total gross income exceeds ₹ 2.50 Lakh, then your employer is under an obligation to issue Form number 16.
Employees or individuals whose income is less than ₹ 2.50 Lakh are exempted from income tax; thus, no tax is deducted; hence no Form 16 is issued. However, in today’s time, employers have started to issue Form number 16 irrespective of income. It is consolidated proof of an employee’s earnings and can be used as necessary documents in various areas.
What happens if Form 16 is not available?
In case you have not received Form number 16 from your employer, you can refer to your Form 26AS available online. The income tax Form 26AS contains the details about the tax deducted from your salary and deposited with the government. However, you should also request and ensure that your employer issues Form number 16 to you.
Form number 16 precautions while filing an income tax return
- All pages of Form number 16 Part A must be signed by the employer either digitally or manually.
- Form number 16 is generated by the Income Tax department when an employer fills in the employee’s details, such as his gross salary, deductions, and allowances per the employee’s information furnished. Employer issues Form 16 to the employees once in an assessment year.
- If you have worked for more than one employer, you are required to collect Form number 16 from each of your employers, as the same would be required when filing your Income Tax return.
What is Form 16A and Form 16B?
Form 16 is an important document when you are filing the income tax return. Its two crucial components are Form number 16A and Form 16B. Let’s dive deeper into each of these forms.
Form number 16A is a certificate capturing details of TDS deducted on income other than salary. TDS on salaries is deducted at an average income tax slab as estimated based on its income. In contrast, TDS on income from other sources such as interest income, rent, etc., is deducted at the government’s rate. The borrower issues form 16A within 15 days after the quarter ends. For example- for the December quarter of 2016, Form number 16A will be issued before 15th January 2017.
Form number 16A is issued by the borrower, your bank or employer, or any other borrower. Form number
16 A is issued by the bank when TDS is deducted from your income regarding FD’s interest, insurance commission, rent receipts or any other income earned. TDS deducted on other payments are also reflected in Form 16A.
Components of Form 16A
- Name and address of the borrower
- TAN and PAN number of the borrower
- Name and address of the borrower
- PAN of borrower
- Nature of payment, the amount paid and date of payment
- The receipt number of the TDS payment
- Challan details of TDS deposited.
Form 16B includes the detailed information of the tax calculation after considering the investments declared by you at the start of the year and the proof of other investments made during the financial year.
Form 16B also includes detailed information about all those allowances necessary to calculate your tax and other details like medical bills, house rent, and donations as furnished by you to the employer.
Components of Form 16B
Part B of Form 16 is an Annexure to Part A and includes the following information.
- Break up of Salary.
- Any other Income declared by the employee.
- All deductions under Chapter VI-A.
- Relief under Section 89.
- Tax deducted at source.
- Net Income tax, which is payable/refundable.
Difference Between Form no. 16, 16A and 16B
Form 16, 16A, and 16B are all certificates of tax deducted at the source. The major difference between the three is the person issuing these certificates.
Form 16: It is issued by the employer and includes information about the tax deducted by them on the income from salary after considering the allowances and investments declared by you along with its proof.
Form 16A: It is issued by the financial institutions, entities and people who have deducted tax at source based on your income arising other than salary. For instance, income earned from interest on savings or fixed deposit, income from rent, etc.
Form 16B: It is issued to account for tax deducted at source on the income earned from the sale of immovable property. As per the Income Tax Act, the buyer of immovable property must deduct TDS of 1% on the sale value and submit it to the Income Tax Department. Form 16B serves as proof that the buyer has deposited the tax.
Benefits of Form number 16
Form number 16 is proof that the employer has deposited the tax deducted at the source and has not committed any fraud. It also has numerous other similar advantages it is considered an ‘income from salary’ statement. Form number 16 is demanded by various government authorities and companies on demand, for example:
- Visa issuance.
- When changing jobs, it becomes a base for the next employer to calculate your tax liabilities.
- It is income proof.
- A document to check for any overpaid taxes.
- It helps in filing an income tax return.
- Single document to check all your tax-saving investments.
- For loan assessment and approval.
How to get Form no. 16?
Form 16 is issued by the employer to the employee as proof of tax deducted at the source. The employer must issue Form 16 for the TDS deducted on salaries.
Employers can either issue a print copy of Form number 16 to their employees or in soft copy to be downloaded from the employer’s account on the TRACES website. Some employers also guide their employees to any outsourced online platform for payroll. Ask for a photocopy of Form 16 if you have misplaced the original one.
To get the previous year’s Form 16, you can either ask your employer or check on the employer’s outsourced payroll platform.
To get Form 16A, you need to ask the financial institution to issue you the form. If the form is available, you can easily download it. For TDS on income from rent, you need to ask your tenant to issue you Form 16A, while you need to ask your employer if you have worked as a commission agent.
To get Form 16B, you need to ask the buyer of your immovable property to issue you the form.
Filing Income Tax Returns with Form no. 16
Form 16 is an important document in the process of filing an IT return. Any individual whose income is ₹ 5 Lakh per year is mandatory to file the return online. You can file your return by yourself or take the help of a Chartered Accountant or any third party service provider.
After filing your return online, you need to e-verify it by generating an e-verification code using:
- Aadhaar card OTP
- Demat Account
- Net banking
- By generating EVC
Required Details of Form 16 while Filing Income Tax Return
To file your Income Tax Return, you would be required to fill in the following details:
- Allowances that are part of exemptions under section 10 of the Income-tax act
- The breakup of deductions under Section 16
- Taxable Salary
- Income (or admissible loss) from house property reported by employee offered for TDS
- Income under the head Other Sources offered for TDS.
- The breakup of Section 80C Deductions
- The aggregate of Section 80C Deductions
- Tax Payable or Refund Due
- TDS Deducted by Employer
- TAN of Employer
- PAN of Employer
- Name and Address of Employer
- Current Assessment Year
- Taxpayer’s Name and Address
Visit Dialabank to gather all the vital information about Form 16 and its features.
FAQs about Form number 16
✅How do I get Form number 16?
You can get Form 16 either from your employer or through the online payroll service provider.
✅Can we download Form number 16?
Form 16 is not available for download from the TRACES account of an employee. Thus, it can only be downloaded by the employer.
✅Is Form number 16 mandatory for all employees?
Employers must issue Form 16 to all those employees whose annual income exceeds ₹ 2.50 Lakh.
✅What is Form number 16, Part A and B?
Form number 16 is divided into two halves, Part A and Part B. Part A of Form 16 includes details of employee and employer:
On the other hand, Part B of Form 16 includes:
✅What is the difference between Form number 16 and 16a?
Form 16 is the certificate of TDS deducted from salary. It is sub-categorized into Part A, including employer and employee details, and Part B, which includes other details like deductions, salary paid, tax payable, etc.
On the other hand, Form 16a is the TDS certificate deducted on income other than salary like interest from fixed deposit, TDS on rent, etc.
✅Is Form number 16a mandatory for ITR?
Yes, Form 16, 16A, and 16B are mandatory for filing ITR.