How to understand Form 16 for Income Tax Filing

Posted on Posted in Income Tax, Income Tax Return, Incometaxefiling, IT Return

How to understand  Form 16 for Income Tax Filing

At the time of e-filing your Income Tax Returns, you will come across he form 16. But, what is actually Form 16? Form 16 is a significant certificate which is usually issued by the Income Tax department under the section 203 of the Income Tax Act for tax deducted at source from the salary of a tax payer. A Form 16 is a comprehensive record of income tax paid by the tax payer which is deducted from the salary of the employee by the employer of particular firm or company.

The Form 16 is also called as a ‘Salary Certificate’as it also comprise of all the details regarding the salary paid by the employer along with other essential elements like tax deducted from salary and much more. This certificate is issued by the employer of a firm even if the salary of the employee is not eligible for tax deduction.

In fact, the Form 16 is divided into 2 parts such as Part A and Part B. Here is everything you need to know about the Form 16, the two parts, Part A and Part B which are used for filing Income Tax Returns from the official web portal of Income Tax. Check it out!

How to understand Form 16 for Income Tax Filing

Form 16 – Part A

In the Form 16, the first part called Part A is the certificate of TDS (Tax Deducted at Source). This is the reason why the Form 16 becomes a proof of the TDS which is deducted by the employer from employee’s salary and paid to the account of government. Form 16 is also called as “Traces” Form that consists of the following details:

  • Personal Information of employee
  • Address of the Employee
  • PAN (Permanent Account Number) & TAN (Tax Deduction and Collection Account Number) of the employer
  • Working period of the employee with the employer during the FY
  • Assessment year
  • Summary of deducted tax and paid to the government account by the employer.

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Usually, the employer of a company or a firm deducts the TDS from the salary account of an employee and deposits it to the account of Government. All the details regarding the deduction of TDS deducted are included in this Traces form or Part A of the Form 16.This Form 16, Part A also includes other details such as BSR code of the bank branch. These details are essential at the time of making payments and challan numbers for reference.

Form 16 – Part B

In the Form 16, the first part called Part B is an annexure that comprises various details of the employee such as salary paid, other income, any dues of Income tax and total tax paid. All these details are made into a record alongside the salary and associated deductions and exemptions and are calculated in a bit by bit way. To say it in an understandable way Form 16 is a thorough detailed record of the employee’s salary. Here are the details that are included in the Part B of Form 16:

  • Gross salary
  • Exemptions claimed under section 10 of the IT Act
  • House Property Income Details
  • Net taxable salary after deducting these exemptions
  • Salary Deductions under section 80 C to 80 U
  • Amount of tax on income
  • Total Income tax paid

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Need of Form 16

Form 16 is actually essential due to its usefulness at the time of filing income tax returns to the IT department. A Form 16 is a complete record of the employee that includes all the details regarding the salary and Income Tax paid. Form 16 is also used as a Proof of income during different transactions such as loan processing, property purchase,and much more.

Additionally, a Form 16 can also be used to authenticate whether precise Income taxes are deposited to the government account by checking the amounts that are present in your Form 26AS. It is a proof that you are paying taxes in a correct way to the government.

How to Download Form 16?

Usually, the Form 16 is issued by the employer of your company or firm in the form of hard copy and a soft copy as well. These days, the employers have been issuing digitally signed Form 16 for the employees via the E-mails. You can download the Form 16 via your email and used at the time of e-filing Income Tax Returns.

When do you Receive Form 16?

The Form 16 is issued by the employers to their employees every year by the month of May 31. The date may differ from one firm to the other but the month is one in the same.

What happens if the Employer does not issue Form 16?

If the employer of particular company or a firm does not issue Form 16 to the employee, then there is a possibility that you can refer to your Form 26AS via online.

These are the essential details and everything you need to know about the Form 16 for e-filing your Income Tax Returns.

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