Form 16 is a TDS certificate, which is given by employers to employees certifying that TDS has been deducted from their salary. According to the tax rules of India, every employer must deduct a certain amount of salary as TDS at an average rate of income tax. The basic funda is if your net earnings are beyond the exemption limit of Rs.2.5 lakh, your employer would be authorized to deduct a fixed amount from your remuneration and pay it to the government. However, if it comes below the prescribed exemption limit, then no deduction in the name of TDS will be made and this form may not be issued to you. Note that if you have more than one, you’ll get more than one Form 16.
Form 16 has two prominent components, which reflect most of your details bifurcated into parts. They are very important while filing IT returns. Let’s have a look at them in detail.
What is Form 16 (Part A)
Form 16 (Part A) incorporates TDS on salary. Part A of Form 16 contains the details about TDS deducted from salary and the amount paid as salary in each of the quarters of the financial year. If an employee has worked for more than one employer during the financial year, then he will get 2 Part A of Form 16.
Components of Form 16 Part A TDS Certificate
1. Name, TAN no., PAN card no., and Address of the employer
2. Name, PAN card no. & Address of the employee
3. Details of tax deducted & deposited quarterly with the government
4. Assessment year for which the TDS has been deducted.
5. The time period of employment with the employer
6. The TDS payment acknowledgement no.
What is Form 16 (Part B)
Part B of Form 16 contains details about the computation of taxable income and tax to be paid / refundable. It also includes salary & its breakup that has been paid to the employee during the financial year, whether from one employer or from more than one and particulars of any other income reported to an employer by the employee.
Components of Form 16 Part B TDS Certificate:
- Detailed salary particulars like HRA, deductions claimed like PPF, NSC, Pension, Gratuity, Leave Encashment, LTA, etc.
- Deductions are allowed under the Income Tax Act of Chapter 6A.
- Education tax and surcharge (if any).
- If you have more than one job in a year, you’ll get more than one Form 16.
- The employer prepares the Part B Form himself and issues it along with Part A.
Recommended: New Approach to File TDS Returns Online
Form 16 Benefits
- This Form contains each and every detail about how much TDS has been deducted and deposited. The particulars, which are filled in Form 16 are required to be presented in the Income Tax Return, however, at the time of filing the return, there is no need to get a copy of it.
- Once this TDS Certificate has been issued to you, it becomes the most authorized proof of your income accompanied by the tax you’ve paid thereafter. This is the most prominent evidence that can be shown to the banks at the time of Home Loan Application.
Form 16 Revised Format Released
The income tax department has recently announced the revised salary TDS certificate i.e. form 16 with individual break up for income and taxes paid. The IT department would be able to go through the break-up in an easier manner and would further help them with any incorrect claims against the taxes. The new revised form 16 will include the tax exemption allowed in the form.
