The tax filing process for salaried employees starts with getting Form 16 from their employers which is in turn used to file their tax returns. The use of Form 16 significantly simplifies the tax filing process and allows the taxpayer to know TDS details. Know more about what is Form 16 and how to download it.
Read More: Common ITR form for FY 2023-24 – All you need to know
What is Form 16?
Form 16 is a certificate issued by an employer to their employee, which contains information about the employee’s salary, deductions, and the amount of tax deducted at source (TDS) by the employer on behalf of the employee. It is typically issued annually by the employer after the end of the financial year, which runs through April 1 to March 31. Every salaried individual is entitled to receive Form 16 from their employer on or before June 15th of the subsequent year, following the financial year in which tax deductions were made.
In case an employer fails to issue Form 16 within the specified timeframe, they are subject to a penalty of Rs. 100 per day until the issuance of the form takes place.
What are the components of Form 16?
The Form 16 is divided into two parts, namely, Part A and Part B.
Part A of Form 16 includes details such as the employer’s name and address, the employee’s name and address, the employee’s Permanent Account Number (PAN), the employer’s Tax Deduction and Collection Account Number (TAN), and the period of employment. It also provides a summary of the tax deducted and deposited by the employer.
Part B of Form 16 provides a detailed breakup of the employee’s salary, including the salary paid, allowances, deductions, and exemptions. It also shows the total income and the total tax payable by the employee for the financial year. Additionally, Part B may include details of other income, deductions, and taxes paid by the employee.
How can taxpayers download Form 16?
Form 16 is provided to the employees by their employers at the end of the financial year. This form is also available online and can be downloaded by the employees from the Income Tax website / TRACES website.
Steps to download Form 16 from the Income Tax Department website
- Visit the official website of the Income Tax Department: https://www.incometaxindia.gov.in/Pages/default.aspx
- Navigate to the Forms/Downloads section and click on the “Income Tax Forms” option.
- From the list of frequently used forms, select “Form 16.”
- Taxpayers will find the options for downloading Form 16 in either PDF format or as a fillable form. Here the desired option will have to be chosen and based on the individual preference.
Steps to download Form 16 from the TRACES website
Taxpayers should visit the official website of the Income Tax Department’s TRACES portal at https://www.tdscpc.gov.in/app/login.xhtml.
- They need to enter their user ID, password, and other required details in the provided fields.
- It is important to cross-check all the entered details for accuracy and click on the login button to proceed.
- Once logged in, they should navigate to the ‘Downloads’ tab on the portal.
- Under the ‘Downloads’ section, they should locate and select the ‘Form 16’ option.
- They need to choose the relevant financial year for which they wish to download Form 16.
- After selecting the financial year, they should click on the ‘Go’ button.
What are the uses of Form 16?
Form 16 has multiple uses for taxpayers. Some of these uses are mentioned hereunder.
Proof of Income
Form 16 serves as important evidence of an individual’s income earned during a specific financial year. It provides a consolidated summary of the salary received from the employer, including details of basic pay, allowances, and perquisites.
Tax Calculation
Form 16 assists taxpayers in calculating their tax liability. It contains information about the tax deducted at source (TDS) by the employer on behalf of the employee. Additionally, it includes details of deductions claimed under various sections of the Income Tax Act, such as Section 80C (for investments) or Section 80D (for health insurance premiums).
Income Tax Return Filing
Form 16 is crucial for filing income tax returns. It simplifies the process by providing accurate details of salary income, deductions, and taxes paid. Taxpayers can directly transfer the information from Form 16 to the relevant sections of the income tax return form.
Income Verification
Form 16 acts as a valid document to verify the income declared by the taxpayer. It is accepted by tax authorities and financial institutions to validate income details while undertaking financial transactions such as applying for loans or credit cards.
Refund Claims
In cases where excess tax has been deducted from the salary, Form 16 facilitates the process of claiming tax refunds. It provides a comprehensive record of the TDS amount deducted by the employer. If the total tax liability is lower than the TDS amount, taxpayers can claim a refund for the excess tax paid.
Record Keeping
Form 16 serves as an important record of income and taxes paid during a financial year. It is advisable for taxpayers to retain a copy of Form 16 for future reference. This document may be required for audits, financial planning, or any other purpose where income-related information needs to be accessed.
Conclusion
Form 16 is a crucial document for taxpayers and is used not only for tax filing but also as an important record that can be used for other purposes like key documentation in loan processing, buying insurance, etc. Therefore, it is important to keep a record of Form 16 for at least 6 years from the end of the relevant financial year.
FAQs
The basic difference between Form 16 and Form 16A is that the former is the detailed record of income from salary while the latter is the record of income from sources other than salary like rent, commission, brokerage, interest income, etc.
Form 16 is issued annually and can be downloaded by the employer from the TRACES website or the Income Tax Website.
The contents of Part A of Form 16 include details of the Employer’s name and address, their PAN and TAN, the Employee’s PAN, and the details of the tax deducted and deposited with the government on a quarterly basis. The Part B of Form 16 includes the salary breakup of the employee, details of the allowances as per section 10 of the Income Tax Act, deductions under Chapter VIA of the Act, and tax relief if applicable under section 89 of the Act.
Every salaried individual is eligible to get Form 16 for their income that is deducted at source. Form 16 is to be provided even if the taxable income is below the basic exemption limit as it is the record of the tax deducted at source for the entire financial year and is used to file the Income Tax Returns.
