Form 16

Form 16 is a tax certificate issued to salaried individuals by their employers. It is issued at the end of every financial year and contains essential details about the income tax deducted by the employer.

Form 16 is a crucial document for filing your Income Tax Returns (ITR). Therefore, it is important to understand what is Form 16, Form 16 online verification and the option for Form 16 download.

Here is a page to guide you through everything you need to know about Form 16.

What is Form 16?

Form 16 is a tax certificate that applies to TDS on salary issued by employers to their employees every year. It contains details of the salary paid, the income tax deducted by the employer, and the amount deposited with the Income Tax(IT) Department.

If you are a salaried employee, your employer is responsible for deducting the income tax on your salary and depositing it with the IT Department. The income tax is deducted before paying the salary to you and hence referred to as a case of tax deduction at source (TDS).

Employers must provide these details of your total earnings and the tax deducted, which are consolidated in Form 16.

Form 16 also includes details of applicable tax deductions and exemptions, which help determine your taxable income. Hence, it is vital to file your ITR accurately.

Types of Form 16

Form 16 is made up of two components: Part A and Part B.

• Part A of Form 16 contains details of the employee, the employer and the TDS deducted from the salary.
• Part B is an Annexure to the TDS certificate in Form 16, issued by the employer. It includes salary income, applicable exemptions, allowable deductions, taxable income and the income tax payable.

Let us understand these components of Form 16 and the details they contain in the following sections.

Importance and Benefits of Form 16?

Proof ​of Income  

Form 16 acts as a ​​record of the income earned from an employer or employers during the financial year.

Proof of In​​come Tax paid

It serves as e​vidence of income tax deducted at source by the employer and deposited with the government.

Essential​​ to File ITR

The infor​​mation provided in Form 16 is crucial for filing ITR with the IT department each year.

Claim Refu​​nds

Form 16 he​​lps in claiming tax refunds if applicable to your individual financial circumstances.

Mandato​ry for Loans

Form 16 is​ a mandatory document to apply for loans with banks or other financial institutions.

Essential for Vis​a Applications

Certain countries requ​​ire Form 16 as part of the documentation for visa approval.

Form 16 - Part A

Part A of Form 16 contains certain details about the employee, the employer and the income tax deducted from salary.

Details provided in Form 16 - Part A

• Name and address of the employer
• Name and address of the employee
• PAN of the deductor (employer)
• TAN of the deductor (employer)
• PAN of the employee
• Assessment Year
• Period with the employer
• Summary of salary amount paid for every quarter of the year
• Summary of tax deducted
• Details of the amount deposited in the Central Government Account

Form 16 - Part B

Part B is an Annexure to the TDS certificate in Form 16, issued by the employer. It includes breakdown of the gross salary, applicable exemptions, allowable deductions and the income tax payable.

Chapter VI of the Income Tax Act 1961 is a key section for tax deductions and deals with deductions applicable to your gross total income. It is defined under Section 80C to Section 80U that allow tax deductions for specific expenses, contributions and investments.

Details provided in Form 16 - Part B

• Gross salary
• Applicable tax exemptions under Section 10, such as House Rent Allowance (HRA), Death-cum-retirement gratuity, etc.
• Allowable deductions under Section 16, such as Standard Deduction.
• Any other income reported by the employee
• Gross total income
• Deductions allowed under Chapter VI-A
  • Life insurance premium, contributions to various savings and investment plans, such as Equity Linked Savings Scheme (ELSS), Public Provident Fund (PPF), Senior Citizens Savings Scheme (SCSS), etc., under Section 80C
  • Contributions to life insurance pension funds under Section 80CCC
  • Contributions made by the employee to specified pension schemes, such as NPS under Section 80CCD(1)
  • Contributions made by the employee to specified pension schemes, such as under Section 80CCD(1B)
  • Contributions made by the employer to specified pension schemes, such as NPS under Section 80CCD(2)
  • Health insurance premium under Section 80D
  • Contributions made as donations to specified institutions under Section 80G
  • Interest amount received on savings account under Section 80TTA
• Total taxable income
• Applicable tax on total income
• Rebate under Section 87A
• Surcharge
• Health and Education Cess
• Total Income tax payable

When is Form 16 Issued for a Financial Year?

Form 16 is issued each year before June 15th for the preceding financial year. For instance, if income is earned between April and March, Form 16 has to be issued by June 15th of the following year.

This timeline ensures that individuals have sufficient time to file their ITR, which must be submitted by 31st of July each year.

The option for Form 16 download is available for the employers on the official website for TRACES.

Let us now understand how to download Form 16 for salaried employees.

How to Download Form 16?

Only employers can download Form 16 online. It is available on the official website for TRACES (TDS Reconciliation Analysis and Correction Enabling System), an online platform that allows taxpayers to access, verify and correct TDS-related information.

Here is how an employer can download Form 16 from TRACES.

Steps for Form 16 Download

• Step 1: Visit the official website for TRACES.
• Step 2: If you are a new user, provide the necessary details and complete the registration process to create a new account. Existing users can log in using their PAN and password.
• Step 3: Browse and navigate to the “Downloads" tab and click on “Form 16".
• Step 4: Enter the required information and proceed to verify the applicable details.
• Step 5: Click on “Submit".
• Step 6: Navigate to “Downloads" and click on “Requested Downloads".
• Step 7: Provide the request number.
• Step 8: Click on “Go" to proceed with the Form 16 download.
• Step 9: Download TRACES PDF Generation Utility.
• Step 10: Browse the Form 16 zip file and generate the TDS certificate in PDF format.

Eligibility Criteria for Form 16

Form 16 is issued to salaried individuals whose income is taxable under Income Tax laws. Employers deduct tax at source (TDS) for employees whose salary exceeds the basic exemption limit. For instance, the basic exemption limit for taxpayers less than 60 years of age is ₹2.5 lakhs for FY 2023-24.

Who Can Issue Form 16?

Form 16 can be issued only by employers. It is applicable to both full-time and part-time employees receiving a salary payment. If you switch between jobs during a financial year, you are eligible to obtain Form 16 from each employer for the respective period of employment.

If your income is below the taxable limit, Form 16 is not issued, as TDS does not apply. However, some employers may still provide it, or you can request it to keep a record of your income for future reference.

Important Factors to Consider

Multiple E​​mployers

If you were empl​​oyed by two or more employers within the same financial year, you must obtain Form 16 from all the employers. Each Form 16 will correspond to the tenure of your employment with the respective employer.

Form 16 O​nline Verification

Employers mu​​st carefully verify all the details in Form 16 for their validity before downloading and issuing it to the employees. Similarly, employees should thoroughly review the information provided in Form 16 to ensure its correctness.

Incorre​ct Details

If any of t​he details furnished on Form 16 are incorrect, you can reach out to your employer directly. They can make the necessary changes, file the revised TDS return and provide you with the updated Form 16.​

What Details in Form 16 Help you File Your ITR?

While filing your ITR, you can refer to your Form 16 to fill in specific details. Some of the sections in Form 16 that help you file your ITR are as follows:

• Name and address of employer
• PAN and TAN of the employer
• Assessment Year
• Exemptions under Section 10
• Deductions under Section 16
• Taxable salary income
• Income from other sources
• Deductions allowed under Chapter VI of the Income Tax Act
• Taxable income
• Refund due or income tax payable

Difference Between Form 16, Form 16A and Form 16B

While filling your ITR, you may come across different forms applicable to various financial transactions. Form 16 is often confused with Form 16A and Form 16B.

Here is a brief table describing the differences between the forms.

How to Reduce Your Income Tax?

The Income Tax Act provides various tax provisions that allow for various options to reduce your income tax liability. Part B of Form 16 details applicable exemptions and allowable deductions to your taxable income.

Section 80C and Section 80D are two common provisions that can reduce your income tax liability to a greater extent. While Section 80C allows for a tax deduction on certain expenses, savings and investments, Section 80D is exclusive to health insurance premiums.

Health insurance premium paid for yourself, including family and your parents can qualify for a tax deduction under Section 80D for up to ₹1 lakh.

Reliance General Insurance offers health insurance plans online that can provide extensive coverage for your unexpected medical expenses at an affordable premium. You can compare products, determine coverage, opt for add-ons and customise the policy specific to your individual requirements.

Frequently Asked Questions About Form 16

1. How do I get Form 16 online?

   You can get your Form 16 only from your employer. It can be downloaded by your employer from the TRACES website. It cannot be downloaded or received from any other sources.

2. Does Form 16 and ITR refer to the same document?

   No, Form 16 is a TDS certificate issued by your employer that corresponds to your taxable income and the tax deducted by your employer for the financial year.

   ITR is a form or document that you need to file with the IT Department to declare your financial information related to income tax. It includes income, investments, expenses, taxable income and applicable income tax amount.

3. How can I open Form 16?

   Form 16 is password-protected. You can open Form 16, issued by your employer with the password. The password is the first five digits of your PAN, followed by your date of birth in the DDMMYYY format.

4. If Form 16 is not issued to me, should I file an ITR?

   The responsibility of deducting tax on salary and issuing Form 16 lies with your employer. However, it is your obligation to pay the applicable taxes and file your ITR. Even if your employer fails to provide Form 16, you must file your ITR, especially when your salary exceeds the basic exemption limit.

5. Can I file my ITR if I have not received my Form 16?

   Your employer must issue Form 16 to fill your ITR. However, if it has not been issued for reasons such as your salary being below the basic exemption limit, you can still consider filing your ITR.

6. How do I file my ITR without Form 16?

   Filing ITR without Form 16 is simple if you have the required information. Here are the steps that you can follow.

   1. Take your salary payslips and identify your salary components to determine the gross total income
   2. Determine the TDS deducted by your employer and verify it with Form 26AS.
   3. Apply possible exemptions and deductions.
   4. Include income from other sources.
   5. Determine income tax payable.
   6. If you find that you need to pay additional tax, make the applicable payment.
   7. Now that you have all the information, file your ITR online or get expert assistance.
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7. What is the difference between Form 16 and Form 16A in Income Tax?

   Form 16 is a tax certificate applicable to TDS on salary issued by employers to their employees.

   On the other hand, Form 16A is issued by financial institutions for the TDS on income other than salary. For instance, it can be issued by banks for the TDS on interest income earned on fixed deposits.

8. Are employers mandated to issue Form 16 to their employees?

   Yes, employers are mandated by law to issue Form 16 to their employees if they have deducted tax on the salary paid to them.

   Even if no tax is deducted by the employer because the employee's salary is below the basic exemption limit, Form 16 might be issued. Employees can also request for it in such scenarios to keep a record of the income.

9. Is there a penalty for employers not issuing Form 16?

   Employers are mandated to issue Form 16 by the 15th of June following the end of the financial year. If they have not issued it, they are liable to pay a penalty of ₹100 per day until it is issued.

10. What are the documents required for Form 16?

    For Form 16 download, employers need to have all the documents related to the TDS on salary. They need to provide details, such as the financial year, TDS receipt number and TDS amount deducted from salary.

11. Can employees download Form 16 from the TRACES website?

    No, employees are not allowed to download Form 16 from the TRACES website. Only the employers can provide the TDS receipt number and the amount deducted. Employees can get Form 16 only from their employers.