What is Form 16? Meaning & Importance in Tax Filing

Form 16 is a type of tax document that acts as a certificate for Tax Deducted at Source (TDS) on salary payments. The form includes information regarding the income earned, TDS deducted, and other deductions authorized by the Income Tax Act, and as a result, it is considered an important document for salaried persons. Form 16 facilitates the process of submitting income tax returns (ITR), so let’s discuss how to get Form 16 and its eligibility and relevance! While submitting your ITR, you can also make use of an income tax calculator to ensure you are filing every income detail correctly and paying the right amount of tax.

What is Form 16?

As we have just mentioned, Form 16 is a certificate that provides crucial information needed to prepare income tax returns. An employer issues it every year on or before June 15, immediately following the fiscal year in which an employee’s tax is deducted. This certificate is provided in accordance with Section 203 of the Income Tax Act 1961, and that’s why Form 16 is also known as a TDS document.

Many of us don’t really know exactly how does TDS work, so having a document that contains information on the salary paid by an employer to an employee and the income tax deducted from the individual's wage in a certain fiscal year is helpful! Having Form 16 means you will have no issue while filing ITR, and there will be no inaccuracy in your income tax.

If your salary income exceeds the basic exemption level, your employer is obligated to collect TDS from your salary and deposit it with the government. However, those who worked for more than one employer at the same time or changed employment during a fiscal year will obtain Form 16 from each company, but in this blog, we will also inform you how to get Form 16 online. It should be noted that it is not supplied to employees whose income for a given year falls below the tax exemption level, which means they have no tax obligations and no technical need to file an ITR.

Part A and Part B of Form 16

Form 16 is divided into two sections, Part A and Part B, so let us take a look at both parts and see the details.

Part A of Form 16

Part A of Form 16 details the TDS (Tax Deducted at Source) deposited quarterly, and it comprises the employer's PAN and TAN, as well as other vital information. Employers can produce and download this section of Form 16 using the TRACES portal, but before granting the certificate, the employer must authenticate its contents. If you change jobs throughout the fiscal year, each employer will issue a separate Part A for the duration of your employment, so make sure you collect all of those documents in case you have multiple employers.

Here are the key elements of Form 16 Part A:

• Name and address of the employer
• TAN and PAN of the employer
• Employee's Permanent Account Number
• Quarterly overview of total salary payments for the relevant fiscal year
• Summary of taxes deducted and deposited quarterly, confirmed by the employer

Part B of Form 16

Part B of Form 16 is also developed by the employer for its employees, and it includes a full breakdown of the pay and deductions permitted under the Income Tax Act Chapter VI-A. If you change employment in a fiscal year, you need to receive Part B from both employers, just like Part A.

Here are the key elements of Form 16 Part B:

• Detailed breakdown of salaries
• Detailed breakdown of exempted allowances under Section 10
• Deductions permitted under the Income Tax Act (Chapter VI-A)
  • Deductions under Section 80C for life insurance premiums, PPF contributions, and other investments
  • Deduction for contributions to pension funds under Section 80CCC
  • Deduction for employee contributions to a pension scheme under Section 80CCD
  • Deduction for a taxpayer's self-contribution to a registered pension program under Section 80CCD(1B)
  • Deduction for employer contributions to a pension program under Section 80CCD
  • Deduction for health insurance premiums paid under Section 80D
  • Deduction for interest paid on loans acquired for higher education under Section 80E
  • Deduction for gifts under Section 80G
  • Deduction for interest income on savings accounts under Section 80TTA
• Tax computed, surcharge, education and health cess imposed, and relief under Section 89

What Details of Form 16 are Required When Filing IT Return?

The ITR process requires Form 16 meaning you need certain details from this form to file your ITR.

• Exemption of allowance under Section 10
• The breakdown of applicable deductions under Section 16/li>
• The breakdown of applicable deductions under Section 80C
• Profit or loss from the employee's housing reporting
• Income from 'Other Sources' is subject to TDS
• Total deductions under section 80C
• Outstanding refund or tax owed
• Employer's TAN and employee's PAN
• Taxpayer's name and address
• Current assessment year and TDS amount

How do I Get Form 16 Online?

Form 16 download is necessary for employees with certain yearly salaries, so let us explain how to download Form 16 online without hassle.

• First of all, visit the official website of the Income Tax Department of India
• If you are a registered user, please log in with your credentials, which will work as your Form 16 password. But if you are a first-time taxpayer or a new user, you must register on the site by submitting your PAN, your name, date of birth, and contact information.
• After login, you have to go to the 'My Account' page, then go to 'Downloads/Forms' and pick 'Form 16' from the dropdown menu.
• Select the assessment year for which you want Form 16
• Click on the link you receive to obtain Part A of Form 16, which contains information on the taxes deducted by your employer and submitted to the government
• Next, download Part B of Form 16, which includes a thorough breakdown of your pay, allowances, and deductions
• Ensure that all of the information on both portions of Form 16 is correct and matches all your salary records

After validating the information, you may safely store the downloaded Form 16 on your device, and you may also print out the form for future reference. Remember, if you see any irregularities in your record, they should be brought to the attention of your employer and corrected as soon as possible.

Form 16 Eligibility Criteria

Now you know how to obtain Form 16 online, but there is another factor to consider, which is that not everyone is eligible for Form 16. Form 16 eligibility is based on Tax Deducted at Source (TDS), so let us explain what exactly makes one eligible to receive a Form 16.

• Taxable income- If your yearly pay falls under the government's taxable income category, your employer must deduct TDS from your salary, as a result, you will receive Form 16, which outlines the deducted tax.
• Below Tax Brackets- If your income is not in the taxable bracket you are not eligible for Form 16 since no TDS is deducted.
• Good Practice Issuance- Even when TDS is not required, many businesses nonetheless provide Form 16 as a courtesy, and this consolidated income statement can serve a variety of purposes.

What are the Uses of Form 16?

As previously explained, Form 16 is a useful document, and you must know how can we get Form 16 online. Check out the uses of this form and the benefits:

Things to Consider While Checking Your Form 16 Document

When you get Form 16 from your employer, you must ensure that all information is correct. Even in the case you don’t receive it from the employer, you can download it since we have already explained ‘how can I get form 16 online’.

What are the Differences between Form 16, Form 16A, and Form 16B?

Check out the purposes of Form 16, Form 16A, and Form 16B:

1. Form 16

   Form 16 is a TDS certificate supplied by the employer as proof that tax has been deducted from the employee's income, and this form serves as documentation that the tax was submitted to the government. Creating a Form 16 is necessary for submitting income tax returns.

2. Form 16A

   Form 16A is a TDS certificate issued by banking institutions on non-salary income; for example, a Form 16A will be given to you if a bank deducts TDS on your fixed deposit interest income, rent payments, or insurance commissions.

3. Form 16B

   Form 16B is used to report TDS deducted on payments received for the purchase of property under Section 194-IA of the Income Tax Act of 1961, and the buyer of the property is liable for subtracting TDS at a rate of 1% before paying the seller. Following that, the buyer must provide Form 16B to the seller as verification of TDS deduction.

Who Can Issue Form 16 for You?

Income tax Form 16 may only be provided by an employer, and they must issue the certificate if taxes have been deducted from employees' gross income, which is the individual's complete wage before any deductions. The Income Tax Act of 1961 requires employers to send Form 16 to all employees who are eligible to pay taxes.

The following are the circumstances in which the employer may not issue Form 16:

• The employee does not fall under the income tax bracket for which tax is deducted
• Even if the individual falls within the taxable income bracket, TDS may not be applicable due to certain tax advantages for which they are entitled

While it is not required to distribute Form 16 to employees who do not fall within the taxable income bracket, numerous firms do so voluntarily because this process simply offers clarity for the employee! In any event, individuals who are curious about the purpose of Form 16 will find that the solution is to get a Form 16 download pdf version.

Conclusion

Form 16 is an important document for salaried employees since it serves as documentation of tax deductions by their employers and also simplifies the income tax filing procedure! By verifying that all information on the form is correct and swiftly resolving any differences with your employer in the case there is wrong information in the form, you may avoid any problems and ensure easy and trouble-free tax compliance.

You should remember, Form 16 verification and correction not only eliminates double taxes but also serves as credible income proof for a variety of financial and legal purposes that you may require in the future. With Form 16 in hand, you will also find Income Tax E-filing much easier to complete with full accuracy.

Related Articles:

All you need to know about changes in Form 16

Income Tax E-filing: Key Documents Required to File Your Return

ITR returns filing: what documents do you need?

Simple step by step guide for ITR filing

How to Claim TDS Refund: A Simple Guide

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