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Form 16, 16A and 16B under Income Tax Act

The points covered in this article are

  1. What is Form 16?

  2. Who is eligible for Form 16?

  3. Where and How to fill Form 16?

  4. What is Form 16A?

  5. What is Form 16B?

  6. Importance of Form 16

1. What is Form 16?

TDS is liable to be deducted from every salaried employees’ paycheck whose salary limit exceeds Rs. 250,000 per annum with respect to any rebate, deductions and exemptions. Employer deducts TDS on salary and deposits it with the government.

Form 16 is issued by the employer to the employee as a Certificate mentioning the Salary and TDS deduction made from the salary. Each year an employer issues Form 16 under section 203 of Income Tax Act, 1961. This form contains details regarding the tax deduction made. If a person changes job in middle of a year, Form 16 shall be separately issued by each employer

Last date of furnishing Form 16 by employer to employee is 15th June every year, however, it has been extended till August 15th due to the covid-19 pandemic

The features of Form 16 are

● It is issued as per section 203 of Income Tax Act

● Issued each year by the employer

● It contains all details of TDS deduction

● It also includes other tax calculations

2. Who is eligible for Form 16?

Every salaried individual who has a taxable income and tax has been deducted at source by the employer shall be eligible to Form 16. Employees with income below basic exemption limit are not eligible for the provisions

3. Where and how to fill Form 16

Form 16 is given by your employer when he deducts TDS (Tax Deducted at Source, visible in Part-A of the Form 16). It has two parts A and B

Part A

Part A of Form 16 can be generated and downloaded by employers from the TRACES portal If an employer changes various jobs in a single year, the employer shall only issue Part A of the form. Employee can have any number of certifications

Components of Part A of Form 16 are:

● Employer’s name and address

● Employer’s PAN and TAN

● Employee’s PAN

● Details of the tax deducted and deposited on a quarterly basis

Part B

Part B is a consolidated statement covering details regarding salary paid, any other income as disclosed by the employee to the organization, amount of tax paid and tax due, if any.

The components of Part B of Form 16 is

● Salary details such as total salary received, components of a salary (Gratuity, Leave Salary Encashment etc.)

● Exemptions and Deductions allowed under Income Tax Act, 1961 such as House Rent Allowance (HRA), Medical expenses, Conveyance allowance etc.

● Section 80 C / 80 CCC / 80 CCD deductions allowed for contributions in PPF, Life Insurance Scheme

● Net taxable salary of the employee after 'Chapter IV-A' deductions on which tax is calculated

● Cess and Surcharge payable by every taxable assessee

4. What is Form 16A

Form 16 is a TDS certificate issued for the salary of an employee. In the same way Form 16A is issued for income other than salary. The income for which Form 16A is issued are TDS on rent, interest on fixed deposits etc. It contains details such as name and address of deductor/deductee, PAN details, TAN details of deductor and challan details of TDS deposited.

5. What is Form 16B

Form 16B is a TDS certificate for TDS deducted on sale of property. When an immovable property is sold, the buyer has to deduct 1% TDS from the amount that has to be paid and that has to be deposited with the income tax department. The buyer himself should submit Form 16B to the seller.

6. Importance of Form 16

For a salaried employee under the tax bracket, TDS has to be mandatorily deducted. Form 16 allows the assessee to calculate tax easily as all the deductions and net taxable income is already calculated. It also serves as proof of TDS compliance. Many organizations ask for Form 16 from new employees to check if the TDS is deducted correctly by previous employer and calculate tax bracket

Many organizations issue Form 16 as a basic document for tax compliance. Filing ITR without Form 16 can be very much complicated for an individual. In some cases the employer does not issue Form 16. Employees will have to file return with help of other relevant documents like 26AS available on the website, other details available with the employee.

Frequently Asked Questions

1. How to download Form 16?

Form 16 can only be issued by the employer. Employer can download Form 16 from TRACES website by entering PAN details

2. Can Income Tax Return be filed if Form 16 is not issued?

Yes. Employees can file ITR with the help of Form 26AS and other relevant documents

3. Who is eligible to file Form 16?

Employees whose income exceeds the basic exemption limit are eligible to file Form 16.

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