Form 16 is a TDS certificate provided by the employers, which contains TDS deducted from salary and other details like estimate of total income, consideration of deductions etc. Form 16 is one of the most important documents required for salaried individuals to file Income Tax Returns (ITR) accurately. Part A of Form 16 contains the TDS deducted against the salary of the employee, and Part B contains the income details of the employer. In this guide, we will explain in detail the components of Form 16 and everything you need to know to understand and use it effectively.
Form 16 is a TDS certificate issued by the employer containing TDS deducted on salary, the salary income during the financial year. It can be used as a proof of income and TDS deducted during the financial year. It serves as a handy document for ITR filing process as it contains various information related to employer, the taxpayer, TDS deducted, income estimate, deductions claimable etc. It is issued under section 203 of the Income Tax Act.
Form 16 is divided into 2 parts: Part A and Part B. While part A contains a summary of TDS deductions PAN and TAN of the employer, PAN of the employee, etc, part B contains detailed break-up of salary, exemptions and deductions under the Income Tax Act.
TDS needs to be deducted from the salary when the total income of the taxpayer has crossed basic exemption limit. (Rs. 2.5 lakhs under the old regime and Rs. 3 lakhs under the new regime). Note that in case you shifted jobs during the financial year, it is necessary to collect Form 16 from all the employers you have worked with during that year.
To download Form 16 from the TRACES portal, employers must log in using their PAN (as User ID) and password. After logging in, navigate to the ‘Downloads’ tab, select ‘Form 16’, choose the relevant financial year, and verify the PAN and TDS details. Enter the TDS receipt number, tax deducted, and date, then submit the request. Once processed, Form 16 (Part A & B) will be available for download under the ‘Downloads’ section.
To download Form 16 from TRACES, follow these steps:
Step 1: Visit the official TRACES website.
Step 2: If you are already registered, enter your PAN card number (User ID) and Password to log in. For new users, complete the registration process and create a new account.
Step 3: Navigate to the ‘Downloads’ tab and select ‘Form 16.’
Step 4: Choose the Form type and select the financial year for which Form 16 is required.
Step 5: Verify PAN and other details.
Step 6: Enter the TDS receipt number and select the date of the TDS.
Step 7: Add the total tax deducted and collected.
Step 8: Click on submit to request for download.
Step 9: Download the files under the ‘Downloads’ tab once the Form is available for download.
Form 16 is a very important document as:
In the case of salaried employees, Form 16 plays a very important role when it comes to filing income tax returns. It has two components: Part A and Part B.
Particulars | Form 16 | Form 16A | Form 16B |
Description | TDS certificate issued as proof of tax deducted from the employee's salary income. | TDS certificate issued for income other than salary, such as interest income, insurance commission, or rent receipts. | TDS certificate for property purchase under section 194-IA of the Income Tax Act. |
Who Issues It | Employer | Financial Institutions | Buyer of Property |
Income Covered | Salary Income | Other Income | Sale of immovable property - land or building |
Frequency | Issued annually | Issued Quarterly | Each time the transaction takes place. |
Threshold limit | When the income has exceeded the basic exemption limit. | When the specific income has crossed the threshold limit for TDS under the respective section. | When the sale value of the property or the Stamp Duty Value exceeds Rs.50 Lakhs. |
Purpose | Proof that tax has been deducted at source from the employee's salary and deposited with the government. Essential for filing income tax returns. | Issued when TDS is deducted on non-salary income (e.g., interest on fixed deposits, insurance commission, rent receipts). | Proof of TDS deduction on property transactions. The buyer furnishes Form 16B to the seller as proof of the tax deduction. |
Rates | Slab rates | Rates as specified under respective sections | 1% on the amount paid or Stamp Duty Value, whichever is higher. |
Grounds of Difference | Form 16 | Form 26AS |
Meaning | Form 16 is a TDS certificate containing salary TDS and a detailed break-up of salary income. | Form 26 AS is a consolidated document containing all TDS deducted, advance tax payment, self assessment tax payments, income against which TDS deducted during the year, high value transactions, etc. |
Importance | Form 16 is a very handy document for tax filing, but it is not mandatory document required for tax filing. | Form 26AS also is not mandatory to file ITR, though it contains all TDS deductions, and various other details in one place. |
Issuer | Form 16 is issued by the employer | Form 26AS is issued by the Income Tax Department. |
Discrepancies | In case of errors in Form 16, contact your employer to make changes in the Form 16. | In case of errors in Form 26AS, contact the respective deductor to correct their TDS returns (for example, for errors in rent TDS, contact your tenant) |
With Form 16 now being digitally auto-generated through the Income Tax Department’s TRACES portal, it offers the following benefits:
Our software automatically extracts all the relevant information from your Form 16 and prepares your tax return. You do not need to enter anything manually.
Upload your Form 16 to E-File ITR
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