FORM 16

Form 16- Basics

Form 16 is a crucial document for a salaried individual, especially if the employer has deducted tax on income. Form 16 is essentially a certificate provided by the employer to the employee showing the amount of tax deducted from the salary income. When an employee files his income tax return, Form 16 helps one see how much tax has already been paid, and what is due to be paid. The employers need to issue Form 16 to their employees by June 15th of the financial year, following the financial year in which the salary was paid, and tax was deducted.

Part A of Form 16

An employer can generate and download this part of Form 16 through the TRACES (https://www.tdscpc.gov.in/app/login.xhtml) portal. Prior to issuing the certificate, the employer should authenticate its contents. It is important to note that if you change your job in one financial year, every employer will issue a separate Part A of Form 16, for the period of employment.

Some of the components of Part A are:

1. Name and address of the employer
2. TAN & PAN of employer
3. PAN of the employee
4. Summary of tax deducted & deposited quarterly, which is certified by the employer

Part B of Form 16

Part B of Form 16 is an annexure to Part A. If you change your job in one financial year, then it is for you to decide if you would want to get ‘Part B’ of the Form from both the employers or from the last employer. 

Some of the components of Part B are:

1. Detailed breakup of salary
2. Detailed breakup of exempted allowances under section 10 (HRA & Other)
3. Standard Deduction (For AY 2020-21 Rs. 50,000/-)
4. Deductions allowed under the income tax act (under chapter VIA)

Specific fields are notified for deductions mentioned below:

1. Deduction for life insurance premium paid, contribution to PPF etc., under section 80C
2. Deduction for contribution to pension funds under section 80CCC
3. Deduction for employee’s contribution to pension scheme under section 80CCD(1)
4. Deduction for taxpayer’s self-contribution to notified pension scheme under section 80CCD(1B)
5. Deduction for employer’s contribution to pension scheme under section 80CCD(2)
6. Deduction for health insurance premium paid under section 80D
7. Deduction for interest paid on loan taken for higher education under section 80E
8. Deduction for donations made under section 80G
9. Deduction for interest income on savings account under section 80TTA

Details required from Form 16 while filing Income Tax Return (ITR)

List of the following information, which you will require from your Form 16 while filing income tax return (ITR).

1. Taxable Salary
2. Allowances exempt under section 10 (HRA)
3. Income (or admissible loss) from house property reported by employee
4. Income under the head Other Sources offered for TDS
5. Breakup of Section 80C Deductions
6. Aggregate of Section 80C Deductions(Gross & Deductible Amount)
7. Tax Payable or Refund

Additional information, which you will require from your Form 16 while filing income tax return are:

1. TDS Deducted by Employer
2. TAN of Employer
3. PAN of Employer
4. Name and Address of Employer
5. Current Assessment Year
6. Employee (Taxpayer’s) Name and Address
7. Employee PAN

NOTE: In case of any query, please feel free to contact me on this email enquiry@overallaccounting.com