If you are a salaried employee, you must be aware that at the end of each year your Employer issues you a document titled as “Form 16”.
In brief, Form 16 is a document that an employer issues to the employee when the employer deducts TDS on salary payments. This is because, when an employer deducts TDS on salaries, the income tax act requires that a certificate be issued by the employer stating the amount of tax deducted and deposited.
Form 16 is issued once in a year, on or before 15th June of the next year immediately following the financial year in which tax is deducted by such employer.
We have provided below a step by step explanation of what Form 16 contains and what you should be aware of:
Form 16 is amongst the most important documents required to file an income tax return in India for salaried individuals. It is divided into two parts, namely, part A and part B.
Part A contains the following:
- Name and address of employer
- Permanent Account Number (PAN) and TDS Account Number (TAN) of your Employer
- PAN of the employee (should be your PAN)
- Summary of tax deducted and deposited during the relevant year
- Period of employment
- Unique certificate number
- Signature of your employer
Part B contains the following:
- Details of salary paid and the components of salary (such as Basic, HRA, Special Allowance etc)
- Allowances (under section 10), which includes your conveyance allowance, HRA etc. – this would be shown as a deduction from your salary
- Deductions claimed by you (under chapter VIA) which includes deductions such payment for life insurance premium, investment in fixed deposits under section 80C and medical insurance premium paid under section 80D, or any other deduction claimed by you.
- Calculation of tax as per applicable slab rates
- Rebate under section 89
Part B is issued by the employer along with Part A. If a person has held more than one jobs in a given year, there will be more than one Form 16 for the employee (as each employer would issue one Form 16 for the period of employment served by such employee).
Let us have a look at what Form 16 (Part A) looks like.
Let us have a look at what Form 16 (Part B) looks like.
It is important to note that Form 16 is issued only when TDS is deducted by an employer. In case no TDS is deducted by the employer, he may not issue a Form 16. It is also possible that the employer has failed to deduct TDS from your salary due to any unavoidable reasons.
You must note that your are required to file the Income Tax return irrespective of whether the employer issues Form 16 or not. [/vc_column_text][/vc_column][/vc_row]