If you are a salaried employee, you might be familiar with Form 16 when filing income tax returns. Both employers and employees are required to understand its components, eligibility, and importance to ensure tax compliance. 

Let us understand the intricacies regarding the same in this article.

What is Form 16?

Form 16 is a TDS certificate that shows the salary earned and the TDS deducted from your salary. It is issued by the employer before June 15th every year, after the end of the financial year in which the income was earned. Keep in mind that you should receive Form 16 from all the employers you have worked with. 

Form 16 plays a very important role when it comes to filing income tax returns for salaried individuals. It has two components: Part A and Part B.

Part A of Form 16

Part A of Form 16 provides details of TDS deducted and deposited quarterly details of PAN and TAN of the employer and 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. The employer should authenticate the certificate's contents before issuing it. 
It is important to note that if you change your job in one financial year, each 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
• Quarterly summary of total salary payments for the concerned financial year
• Summary of tax deducted and deposited quarterly, which is certified by the employer

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 contains details of the breakup of salary and deductions approved under Chapter VI-A. 
If you change your job in one financial year, you should take Form 16 from both employers. Some of the components of Part B notified newly are:

• Detailed breakup of salary
• Detailed breakup of exempted allowances under Section 10
• Deductions allowed under the Income Tax Act (under chapter VIA):  
  The list of deductions mentioned is as below:
  • Deduction for life insurance premium paid, contribution to PPF etc., under Section 80C
  • Deduction for contribution to pension funds under Section 80CCC
  • Deduction for employee’s contribution to a pension scheme under Section 80CCD(1)
  • Deduction for taxpayer’s self-contribution  to a notified pension scheme under Section 80CCD(1B)
  • Deduction for employer’s contribution to a pension scheme under Section 80CCD(2)
  • Deduction for health insurance premium paid under Section 80D
  • Deduction for interest paid on loan taken for higher education under Section 80E
  • Deduction for donations made under Section 80G
  • Deduction for interest income on savings account under Section 80TTA.
  • Tax calculated, surcharge, education and heath cess charged, relief under section 89.

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

Form 16 - Form 16 is a TDS certificate issued by the employer as proof of tax deducted from the employee's salary income. It serves as proof that tax has been deducted at source from the employee's salary income and deposited with the government. It is essential for filing income tax returns.

Form 16A - Form 16A is a TDS certificate issued not by the employer but by financial institutions on your income other than your salary. For example, a Form 16A shall be issued to you – when a bank deducts TDS on your interest income from fixed deposits, for TDS deducted on insurance commission, for TDS deducted on your rent receipts.

Form 16B - Form 16B is issued for TDS deducted on payments made for the purchase of property under section 194-IA of the Income Tax Act, 1961. The buyer of the property is responsible for deducting TDS at the rate of 1% before making payment to the seller. Subsequently, the buyer needs to furnish Form 16B to the seller as proof of TDS deduction.

When will Form 16 be Available for FY 2023-24?

The due date to issue Form 16 is 15th June 2024. If your employer deducted TDS from April ‘23 - March ’24, then Form 16 must be issued by 15th June '24. If you lose your Form 16, you can request a duplicate from your employer.

What are the Eligibility Criteria for Form 16?

According to the regulations issued by the Finance Ministry of the Indian Government, every salaried individual whose income falls under the taxable bracket is eligible for Form 16. 

If an employee’s income does not fall within the tax brackets set, they will not need to have Tax Deducted at Source (TDS). Hence, in these cases, the company is not obligated to provide Form 16 to the employee.

However, nowadays, many organisations issue this certificate to employees as a good work practice. It contains a consolidated picture of the individual’s earnings and has other additional uses.

Why is Form 16 Required?

Form 16 is a very important document as:

• Proof that the government has received the tax deducted by your employer.
• Assists in the process of filing your income tax return with the Income Tax Department.
• Proof of Salary Income
• Many banks and financial institutions demand Form 16 to verify the person’s credentials while applying for loans.

Each salaried employee can obtain Form 16 from the employer on or before June 15th. If any employer delays or fails to issue Form 16 by the specified date, the employer is liable to pay a penalty of Rs.100 per day until the default continues.

How to Download Form 16?

TRACES (TDS Reconciliation Analysis and Correction Enabling System) is an online website by the Income Tax Department of India. It is used to manage TDS-related activities and provides services to employers, taxpayers, and other stakeholders. This platform allows employers to download Form 16 Part A & B. 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.

Click here to download a sample of Form 16

Form 16 Details when Filing Your Return

With reference to the image below, here is where you can locate certain information for filing your income tax return for FY 2023-24 (AY 2024-25).

• Allowances exempt under Section 10
• Break up of deductions under Section 16
• Taxable salary
• Income (or admissible loss) from house property reported by an employee and offered for TDS
• Income under the head ‘Other Sources’ offered for TDS
• Break up of Section 80C deductions
• The aggregate of Section 80C deductions (gross and deductible amount)
• Tax payable or refund due

You can also find additional information of your employer in your Form 16 while filing your annual return, such as:

• TDS deducted by the employer
• TAN of employer
• PAN of employer
• Name and address of employer
• Current assessment year
• Your PAN

Points to be Noted while Checking Form 16

• Once an individual receives Form 16 from the employer, it is their responsibility to ensure that all the details are correct.
• One should verify the details mentioned in Form 16, for example, details of the amount of income, TDS deducted, etc.
• If any of the details is mentioned incorrectly, one should immediately reach out to the organisation’s HR/Payroll/Finance department and get the same corrected.
• The employer would then correct their end by filing a revised TDS return to credit the TDS amount against the correct PAN. Once the revised TDS return is processed, the employer will issue an updated Form 16 to their employee.

Upload Form 16 & File Income Tax Return

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

Download Consumer Guide

Download

You can also refer to these articles regarding Form 16 

1. Form 16 Password
2. E-file without Form 16
3. Steps to File ITR without Form 16
4. E- filing with multiple Form 16s
5. Automatic Form-16 generation
6. Difference between Form-16 and Form-16A
7. Check if Form-16 carries a valid signature