Form 16

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Form 16 Issuance

Form 16 is a certificate issued by an employer to their employee, which contains details of their salary, deductions made during the year, and the tax paid on their behalf by the employer. It is a crucial document that an employee needs to file their income tax returns.

As per the Income Tax Act, 1961, employers are required to issue Form 16 to their employees by 15th June of the financial year following the year for which the certificate is issued. For example, for the financial year 2021-22, the Form 16 must be issued to the employee by 15th June 2022.

If the employer fails to issue Form 16 within the stipulated time, they may face penalties as per the Income Tax Act. In case of any discrepancy in the Form 16 issued by the employer, the employee should bring it to their notice and get it rectified before filing their income tax returns.

Form 16 is a certificate issued by an employer to their employee, which contains details of their salary, deductions made during the year, and the tax paid on their behalf by the employer. It is a crucial document that an employee needs to file their income tax returns.

As per the Income Tax Act, 1961, employers are required to issue Form 16 to their employees by 15th June of the financial year following the year for which the certificate is issued. For example, for the financial year 2021-22, the Form 16 must be issued to the employee by 15th June 2022.

If the employer fails to issue Form 16 within the stipulated time, they may face penalties as per the Income Tax Act. In case of any discrepancy in the Form 16 issued by the employer, the employee should bring it to their notice and get it rectified before filing their income tax returns.

Structure of Form 16  

Form 16 is a certificate issued by an employer to their employee, which contains information related to their salary, tax deductions, and tax payments made on behalf of the employee during a financial year. It is an essential document for an employee to file their income tax returns.

The Form 16 has two parts – Part A and Part B. Let’s understand the details of each part in more detail:

  1. Part A of Form 16: Part A of Form 16 contains details of the employer and the employee, such as their name and address, Permanent Account Number (PAN), Tax Deduction and Collection Account Number (TAN), and their respective income tax jurisdiction. Additionally, it also includes details of the tax deducted at source (TDS) by the employer on behalf of the employee, including the date of deduction, amount deducted, and the amount deposited with the government.

  2. Part B of Form 16: Part B of Form 16 provides detailed information related to the salary and allowances paid to the employee, as well as the tax deductions and exemptions claimed by the employee. This part is further divided into two segments, B1 and B2, which are explained below:

  • B1 segment: This segment contains details related to the salary and allowances paid to the employee, such as basic salary, house rent allowance, special allowances, and any other income or bonus received during the year.

  • B2 segment: This segment includes details of the tax deductions claimed by the employee, such as investments made under section 80C, 80D, or any other sections of the Income Tax Act. It also includes details of any other deductions or exemptions claimed by the employee, such as interest on housing loans or medical reimbursements.

In addition to the above details, Form 16 also includes a unique identification number (UIN) that helps in tracking and identifying the document.

It is important to note that the Form 16 should be issued only by the employer and should be issued separately for each employee. The information provided in Form 16 should be accurate and must be cross-checked by the employee before filing their income tax returns.

TDS on Salary

Tax Deducted at Source (TDS) on salary refers to the amount deducted by an employer from an employee’s salary as income tax before making the payment to the employee. As per the Income Tax Act, 1961, an employer is required to deduct TDS from the salary paid to an employee if the employee’s income exceeds the basic exemption limit.

The TDS on salary is calculated based on the income tax slabs applicable for the financial year and the employee’s income. The employer deducts the TDS based on the employee’s salary, allowances, perquisites, and any other income received during the financial year. The TDS rate varies based on the income tax slabs and ranges from 0% to 30% for individuals.

To calculate the TDS on salary, the employer must obtain the employee’s PAN and submit it to the income tax department. The employer must deduct TDS from the salary payment and deposit it with the government within a specific due date. The employer must also issue Form 16 to the employee as proof of the TDS deducted and deposited with the government.

It is essential for an employee to check their Form 26AS, which is a consolidated tax statement, to ensure that the TDS deducted by the employer has been deposited with the government. If there is any discrepancy in the TDS amount, the employee must approach the employer to rectify it before filing their income tax returns.

In conclusion, TDS on salary is an important aspect of an employee’s income tax payment and must be calculated and deposited accurately by the employer. The employee must also verify the TDS amount and ensure that it has been deposited with the government to avoid any penalties or legal issues.

Deposit of Tax to Government by Employers

Employers are responsible for deducting TDS from their employees’ salary and depositing it with the government within the due date specified by the income tax department. The TDS amount is deposited to the government through online mode using the Electronic Clearing System (ECS) or internet banking.

Here are the steps that an employer should follow for depositing TDS to the government:

  1. Obtaining TAN: The employer must obtain a Tax Deduction and Collection Account Number (TAN) from the income tax department. The TAN is a ten-digit alphanumeric number that is used to identify the employer’s TDS payments.

  2. Deducting TDS: The employer must calculate the TDS amount to be deducted from the employee’s salary based on the income tax slabs applicable for the financial year. The TDS should be deducted at the time of making the payment to the employee.

  3. Filing TDS Return: The employer must file the TDS return for the relevant quarter with the income tax department. The TDS return contains details of the TDS deducted, deposited, and the PAN of the employee.

  4. Depositing TDS: The employer must deposit the TDS amount with the government within the due date specified by the income tax department. The TDS can be deposited online using the Electronic Clearing System (ECS) or internet banking.

  5. Issuing Form 16: The employer must issue Form 16 to the employee by 15th June of the financial year following the year for which the certificate is issued. Form 16 is a certificate that contains details of the employee’s salary, TDS deducted, and deposited with the government.

It is important for the employer to deposit the TDS within the due date specified by the income tax department. Failure to deposit the TDS amount within the due date may attract penalties and interest. The employer must also ensure that the TDS amount is deposited accurately to avoid any discrepancies or legal issues.

What is the deadline for employers to file their TDS returns?

The due date for filing TDS returns by employers depends on the type of employer and the quarter for which the return is being filed. The due dates for filing TDS returns are specified by the income tax department, and failure to file the return within the due date may attract penalties and interest.

Here are the due dates for filing TDS returns by employers:

  1. For all types of employers (Government and Non-Government)

    Quarter 1 (April to June): 31st July Quarter 2 (July to September): 31st October Quarter 3 (October to December): 31st January Quarter 4 (January to March): 31st May of the next financial year

  2. For government deductors who issue Form 24G (Challan cum Statement)

    Same as above but with an additional 10 days’ relaxation.

It is important for employers to file TDS returns within the due date specified by the income tax department to avoid any penalties and interest. Employers can file TDS returns online using the Income Tax Department’s e-filing portal or through authorized service providers. Employers should also ensure that the TDS amount is deposited with the government within the due date specified by the income tax department to avoid any legal issues.

Form 16 Issuance FAQ’s

How much will be required to obtain Form 16?

Form 16/16A is issued by the employers to the employee within 15 days of filing their fourth-quarter TDS returns.

What if the employer does not give Form 16?

If the employer fails to provide Form 16 after deducting the TDS then the minimum penalty that the employer will pay is Rs 100 for every day the default continues.

Is Form 16 necessary while filing a return?

Form 16 happens to be the most important document to file the income tax return. Form 16 carries various details of the salary paid, the house property, another source of income, deductions, and the tax paid or the deducted. Hence, it is necessary to have Form 16 before filing the income tax return.

What is the importance of Form 16?

Form 16 is issued to the salaried individuals from their employer when he deducts the tax from the salary of the employee. It is an acknowledgment that states that the deducted tax has been deposited with the Income Tax Department.

How to check the deductions in Form 16?

Part A enables one to view the taxes deducted from the monthly salary. It can be cross-checked with the salary slips. The CAs advise matching the deducted tax details shown in Part A OF Form 16 with the Form 26 AS.

How to file returns if I don’t have a Form 16?

You will be able to file Income tax returns without Form 16 as it is not one of the important forms.

What happens if Form 16 is not filed correctly?

If Form 16 is issued with a mistake the same can be rectified by the employer at your request. A revised form will be issued by the employer once again.

Is it mandatory to file Form 16 for employees? If you are an employer, it is compulsory to issue Form 16 to the employee.

What is the minimum salary to get Form 16?

Every salaried individual who comes under the taxable bracket is eligible for Form 16 if the gross total income is exceeding Rs 2.5 lakhs. You need to pay tax and you are eligible for Form 16.

What if the employer has deducted the TDS and not issued Form 16?

The Income Tax Act states that every person who is deducting the TDS needs to furnish a certificate with the details of the TDS that is deducted and deposited. The employer needs to furnish a certificate in Form 16 mandatorily in the format of Form 16.

How to download Form 16 for salary?

Form 16 can be downloaded from the TRACES portal by the employer before giving it to the employee.

Is Form 16 available online?

Form 16 can be downloaded from the online website of the Income Tax Department, this document is typically issued by the employer for the current financial year and reflects the total earning and the income taxes that are applicable for the financial year.

In case there is no TDS then is the employer required to issue a Form 16?

When the TDS has been deducted a TDS Certificate is issued in Form 16. If no TDS has been deducted by the employer then he may not give a Form 16.

Is Form 16 different from Form 60?

Form 60 is the declaration made by the individual who does not have a PAN whereas Form 16 is the income certificate that is issued by the employer to the employee.

How to get Form 16?

Form 16 can be obtained from the employer. The employer will provide Form 16 even if you are not employed with the employer anymore. This Form 16 cannot be downloaded.