What is Form 16 – Basics, Part A & Part B of Form 16, FAQs

 

1.What is Form 16?- Basics

Form 16 is essentially a certificate employers issue to their employees. It provides a validation that TDS has been deducted and deposited with the government authorities on behalf of the employee. It gives a detailed summary of the salary paid to the employee and the TDS deducted.

Form 16 contains the information you need to prepare and file your income tax return. Employers must issue it every year on or before 15 June of the next year, immediately after the financial year in which the tax is deducted. Form 16 has two components – Part A and Part B.In case you lose your Form 16, you can request for a duplicate from your employer.

2. Part A of Form 16

Part A of form 16 provide details of the quarterly TDS deducted and deposited, details of PAN, TAN of the employer along with other information.An employer can generate and download this part of Form 16 through the TRACES (https://www.tdscpc.gov.in/app/login.xhtml) portal. Prior to issuing the certificate, the employer should authenticate its contents. It is important to note that if you change your job in one financial year, every employer will issue a separate Part A of Form 16, for the period of employment.Some of the components of Part A are:

• Name and address of the employer
• TAN and PAN of employer
• PAN of the employee
• Summary of tax deducted and deposited quarterly, which is certified by the employer.

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3. Part B of Form 16

Part B of Form 16 is an annexure to Part A. Part B is to be prepared by the employer for its employees and contain details of breakup of salary, deductions approved under Chapter VI A. If you change your job in one financial year, you should take Form 16 from both the employers. Some of the components of Part B notified newly are:

a. Detailed breakup of salary

b. Detailed breakup of exempted allowances under Section 10

c. Deductions allowed under the Income Tax Act (under chapter VIA):

List of deductions mentioned are as below:

• 1. Deduction for life insurance premium paid, contribution to PPF etc., under Section 80C
• 2. Deduction for contribution to pension funds under Section 80CCC
• 3. Deduction for employee’s contribution to pension scheme under Section 80CCD(1)
• 4. Deduction for taxpayer’s self contribution to notified pension scheme under Section 80CCD(1B)
• 5. Deduction for employer’s contribution to pension scheme under Section 80CCD(2)
• 6. Deduction for health insurance premium paid under Section 80D
• 7. Deduction for interest paid on loan taken for higher education under Section 80E
• 8. Deduction for donations made under Section 80G
• 9. Deduction for interest income on savings account under Section 80TTA

d. Relief under Section 89

4. Details required from Form 16 while filing your return

With reference to the image below, here is where you will be able to locate certain information for filing your income tax return for FY 2019-20(AY 2020-21).

1. Allowances exempt under Section 10

2. Breakup of deductions under Section 16

3. Taxable Salary

4. Income (or admissible loss) from house property reported by employee offered for TDS

5. Income under the head Other Sources offered for TDS

6. Breakup of Section 80C Deductions

7. Aggregate of Section 80C Deductions(Gross & Deductible Amount)

8. Tax Payable or refund dueRefund Due

Additional information, which you will require from your Form 16 while filing your annual return are:

a. TDS Deducted by Employer

b. TAN of Employer

c. PAN of Employer

d. Name and Address of Employer

e. Current Assessment Year

f. Your (Taxpayer’s) Name and Address

g. Your PAN

5. What is eligibility criteria for form 16?

According to the regulations issued by the Finance Ministry of the Indian Government, every salaried individual who falls under the taxable bracket is eligible for the Form 16. If an employee does not fall within the tax brackets set, he/she will not need to have Tax Deducted at Source (TDS). Hence, in these cases, the company is not under an obligation to provide the Form 16 to the employee. However, these days, as a good work practice, many organizations, even in these cases, issue this certificate to the employee as it contains a consolidated picture of the earnings of the individual and has other additional uses as well.

6. Points to be noted while checking form 16.

Once an individual receives the Form 16 from the employer, it is his/her responsibility to ensure that all the details mentioned therein are correct. In addition to verifying the personal particulars and details of amount of income and TDS deducted, the most important thing one needs to confirm in Form 16 is the PAN number. If it is mentioned inaccurately, one should immediately reach out to the HR /Payroll/ Finance Department of the organization and get the same corrected. The employee will be issued a rectified and updated Form 16 by his/her employer. Besides this, the employer would also need to make a correction from their end by filing revised return of tax, to credit the TDS proceeds to the correct PAN.

5. Frequently Asked Questions

6. Download Consumer Guide

7. Upload Form 16 and File Income Tax Return

Our software automatically picks up all the relevant information from your Form 16 and prepares your tax return. No need to enter anything manually. Upload your Form 16 to E-File ITR