Form 16: Things You Need to Know in 2022

  • Income Tax

TABLE OF CONTENTS

Form 16 is one of the most common financial documents you would come across when filing your Income tax Return (ITR)It's also important to be aware of Form 16, which confirms a salaried employee's tax deduction at source. Learn everything about form 16 in this article.

What is an e-portal for income tax?

In June 2021, the I-T Department launched the new e-portal 2.0, which replaced the pre-existing website called incometaxindiaefiling.org. For income taxpayers, the new web address post 7th June 2021 is called incometax.gov.in. Along with a new website, there would be a new mobile application which would also have step-by-step manual and videos for guidance.

The e-portal for taxpayers also provides multiple options for logging in, a support help desk and a chatbot. Not only can the taxpayers use the e-portal to file their income tax returns (ITRs) but they can also seek refunds by raising a complaint.

Besides the above, it can be used to issue queries and notices to taxpayers. In return, taxpayers can also respond to communicate final orders such as appeals and assessments on the dashboard.

What is form 16?

In India, all employers provide their salaried employees with a Form 16. This form consists of the things an employee needs to know to furnish their tax returns every year. Form 16 is a certificate the employers issue with details such as their income, Tax Deducted at Source (TDS), along with any other essential information.

The purpose of this certification is to serve as proof that the TDS has been deducted by the company and has been paid to the employer on behalf of the employee.

Form 16 comprises of two parts:

  • Part A: Form 16-A: This part of the document outlines the taxes to be deducted by the employer or the company from the employee's salary. This is completed on behalf of the employee.
  • Part B: Form 16-B extensively covers details on the employee's salary and any deductions that may exist along with any additional income.

What is A part of form 16?

As mentioned above, part A of form 16 comprises any deductions by the employer, which are deposited with the government. Along with providing the details of the TDS, it provides other vital information such as the PAN and TAN of the employer. The employers generate this form by using the TRACES portal, which before issuing the certificate, authenticates the details.

If an employee happens to change their jobs within the span of one financial year, they need to get form 16 separately from the respective employers.

What is the B part of form 16?

As an Annexure to form 16-A, form 16-B is prepared for the employees by the employers. As stated above, this extensively covers the break up of the salary of the employee along with the deductions that are approved under the Chapter VI-A of the Income Tax Cat.

Difference between Form 16, Form 16A, and Form 16B:

Form 16, Form 16A and Form 16B are all documents which certify the taxes deducted at the source of income but from different sources of income.

  • Form 16
    Part A of Form 16 comprises the employer's name, address, PAN, and TAN, as well as the employee's name and address. This section also includes the length of work and the amount of income tax deducted.

    Form 16 Part B also includes a full income breakdown. It also details the deductions permitted under the income tax laws. It is critical for an employee to double-check that all information provided in both portions of Form 16 is correct.
  • Form 16A
    Form 16A defines TDS as interest earned on fixed deposits, mutual funds, insurance commissions, and so on. The employee's/name, employer, and address are also mentioned. The PAN and TAN of a deductor are specified.
  • Form 16B
    Form 16B validates the amount of tax deducted at source when purchasing a property worth more than Rs 50 lakh. The buyer pays the TDS amount specified on Form 16B to the Income Tax authorities. This is essentially a TDS certificate for all tax deducted at the source on the sale of immovable property. Many people mistakenly assume that Form 16B is for salary.

Form 16

Form 16A

Form 16B

A TDS certificate displaying salary income generated for employees'

A TDS certificate is issued to employees who earn income other than their base salary.

A TDS certificate for revenue derived from the sale of real estate

Employees' salary income is only affected.

Income from interest, dividends, commissions, mutual funds, and other sources is eligible. A prevalent misperception is that Form 16A is required for paid personnel.

Income from the sale of a building or land is eligible (other than agricultural land)

Issued by an employer to an employee in order to validate legitimate TDS

Issued by an institution or individual that deducts tax on income earned other than salary

Issued to a seller by a deductor (the buyer of land/property) to verify TDS applicable on sale.

Eligibility above INR 2.5 Lakhs

Anyone paying rent above INR 50,000 or more

Eligible for purchase of property which exceeds INR 50 Lakhs


Why Do You Need ITR Form 16?

Form 16 is required to file your income tax returns quickly and effectively. It is proof that certifies that the employer has submitted the money deducted as TDS from your salary. It also includes the tax computation based on the investment declarations you made at the start of the fiscal year.

Eligibility criteria for form 16

All individuals whose salary is deducted at source by their employer are eligible for form 16.

The tax base level is not in question, even if the employee’s salary is exempted, the employer needs to provide a form 16 to the employee if the salary has been deducted at the source.

How to Download Form 16?

Step 1: Go to the Income Tax Department's official website at incometaxindia.gov.in.
Step 2: In the 'Forms/Download' area, select 'Income Tax Forms.'
Step 3: You have the choice of using a PDF or a Fillable Form.
Step 4: To get the Form, click on 'PDF.'

Basics information of form 16

To successfully fill the form 16, all the documents and information listed below need to be detailed in the form for both the part A and B.

Part A

  • TDS certificate number
  • Name and address of the employer
  • Name and address of the taxpayer
  • PAN and TAN of employer
  • PAN and Reference Number of taxpayer
  • Financial year and period of employment
  • Total TDS deducted and deposited for the year

Part B

  • Details about salary
  • Information on allowances
  • Details about deduction
  • Any other income reported by the employee
  • Deductions available against that income
  • Your net tax liability
  • Verification of employer

Fields of form 16 fill up

  • 80C – Allows to reduce taxable income by including tax savings instruments which can be availed by individuals, companies or HUF.
  • 80CCC – Provides deductions of upto ₹1.5 lakh for payments made towards specific funds offered by life insurance. This deduction is within the limit of 80C
  • 80CCD(1) – Contributions made towards NPS or Atal Pension Yojna can claim a deduction under this section of up to ₹1.5lakh.
  • 80CCD(1B) – Additional deduction of ₹50,000 over and above 80CCD(1)
  • 80CCD(2) – contributions made towards the employee’s pension fund can claim a deduction of up to 10% of the employee’s basic salary.
  • 80D – Individuals can claim deductions under this section for any medical insurance premiums paid or top-up premiums and critical health plans.
  • 80E – Those who have taken an education loan can claim a deduction on the interest paid on the loan repayment under this section.
  • 80G – Individuals who have made donations to charity can claim a tax deduction under this section. The deduction is only allowed if the donation is made via cheque, cash or DD.
  • 80TTA – this deduction is available to individuals or HUF on interest income received. A maximum of ₹10,000 can be claimed.

Benefits of form 16

There are many benefits to filing form 16 of the ITR. It acts as proof of TDS being deducted and deposited to the government. This declaration has many many benefits such as:

  • It acts as income from salary declaration
  • Comes in handy while filing income tax returns each year, as it provides the computation of taxes that arise from investments made at the beginning of the financial year.
  • Can be used to justify the granting of a visa.
  • Helps you in keeping track of your tax-saving investments.

How to file ITR with form 16

Online process

Before you begin filing your income tax returns, you must perform several basic duties. If you do not already have an account on the income-tax website, the first step is to create one. Your PAN number serves as your user ID, and your date of birth serves as your password.

The next step is to create Form 26AS. Form 26AS is available for download on the NSDL-TIN website. It will provide you with TDS information for various earnings (including salary and returns on investments, rent or property sales). If your salary/pension income for the fiscal year is less than Rs. 50 lakh, you may now obtain the ITR 1 form by going onto the Income Tax website.

If your salary or pension income for the fiscal year exceeds Rs. 50 lakh, you must file Form ITR 2.

Offline process:

Here's how to file Form 16 Income Tax Returns Offline:

Step 1: Go to the e-Filing website.
Step 2: Under 'Downloads,' select the appropriate ITR utility.
Step 3: Complete the ITR form with the required information.
Step 4: Check all tabs for accuracy and compute the tax.
Step 5: Create an XML sheet with the information you've gathered.
Step 6: Using the ITR e-filing portal, upload the XML.

What to do if your employer fails to provide form 16?

You may be concerned that it is towards the end of June, but your employer has yet to send Form 16 - a certification confirming that taxes have been properly deducted from your pay. Employees who have not received Form 16 from their employers can take the following steps to avoid being penalised:

  • Calculate your salary income:
    Determine all sources of income. For starters, cumulative income from all the sources of income for the fiscal must be calculated. Taxpayers must report income from a variety of sources, including Salary and pension - you can find this information on your pay stubs. Add up your net salary from all of the paystubs you've received from your company throughout the course of the fiscal year.
  • Find TDS:
    Taxpayers who can use their Form 26AS to figure out how much TDS was deducted from their income for the fiscal year. The TRACES website has Form 26AS available for download.
  • Claim deductions:
    Determine the amount of TDS deducted from your earnings. The House Rent Allowance (HRA) is a part of employees' salary. To get the HRA deduction, you must submit your rent receipts ahead of time to your payroll department. You may always claim the receipts when filing your taxes if you haven't submitted them to your employer.
  • Example explaining how to file ITR without form 16:
    After going through the above-stated processes, the individual then needs to calculate the total taxable income and the income tax liability as per the specified rate, if any. If the tax deducted is lesser than the income tax liability, then the individual needs to pay the remaining amount, and if the value is greater, then a refund can be sought.
  • File ITR accordingly:
    Following the steps indicated above, the individual should file their income tax returns for the current fiscal year.

    If your employer deducts TDS from your pay, they are required by law to present you with Form 16. If an employer fails to file Form 16 on or before the 15th of June of a particular, fiscal year, the Income Tax Department will levy a penalty of 100 INR per day of late filing after the deadline.

Frequently Asked Questions

  • How to use form 16 to your advantage?

    Form 16 is used for filing the ITR. It can also be used to obtain a credit card or a loan.

  • How to get form 16 from your employer?

    This document is usually issued by your employer directly.

  • How to get form 16 for previous year?

    Form 16 of the previous year can be only obtained from your employer. It, unfortunately, cannot be downloaded from any portal.

  • Is form 16 mandatory?

    Yes, form 16 is mandatory to be issued to taxpayers.

  • How to download form 16 from traces?

    Login into the TRACES account and then request from 16 from the downloads tab.

  • How to download form 16 using pan number?

    An individual cannot download the form 16 by using their PAN card Number.

  • Can income tax filing be done without form 16?

    While it is important to obtain form 16 for salaried employees, an ITR can be filed without form 16.

  • If there is no TDS deducted, is the employer required to issue a Form 16?

    No, if no TDS has been deducted then the employer is not liable to issue a form 16.

  • What to do if the employer deducts TDS but has not provided form 16?

    The employee can report the matter to an assessing officer, who can then study the matter and levy a penalty as deemed fit.

  • Can I get a duplicate Form 16 certificate if I misplace the original one?

    In the event of a loss of form 16, an employer can issue a duplicate one.

  • What is form 16 for pensioners?

    Pension is mentioned in the list of deductions in form 16. Hence pensioners are liable to file form 6.

  • How to get form 16 for pensioners?

    Pensioners can obtain form 16 from the bank through which they receive their pension.

  • How to do income tax form 16 verification?

    Click on 'View Form 26AS' under the 'My Account’ page. The TRACES website will be launched. Now, under the view/verify the tax credit option, select 'Verify TDS Certificate.'

  • Will there be no tax return without Form 16?

    No, ITR can be filed without a form 16.

  • How to fill form 16 for salary with example?

    For salaried employees, Form 16 is one of the most crucial forms since it contains all of the information about the pay paid and the taxes deducted. The following information must be furnished by a salaried information in Part A and B.

    The following information must be filled out in Part A of Form 16:

    • Personal Information: This comprises the employee's name, address, Permanent Account Number (PAN), and the employer's Taxpayer Identification Number (TAN).
    • Year of evaluation: This denotes the year of assessment, or, to put it another way, the year in which the taxpayer is required to file a tax return.
      For example, the Assessment year will be 2019-20 for income received between April 2018 and May 2019.
    • Time Period: The duration of the employee's employment with the company during the fiscal year in question.
    • The following is a list of the salaries that were paid to the employees.
    • The date the tax was taken from your account.
    • Date of the government's tax deposit.
    • A breakdown of the taxes that were deducted and deposited with the Tax Department.

    The following information must be entered into Part B of Form 16: –

    • Salary in Total: The salary structure is further divided down into components such as house rent, leave travel allowance, leave encashment, gratuity, and so forth.
    • Exemptions: This section of the form contains a list of all applicable exemptions allowed under Section 10 of the Income Tax Act 1961.
    • Earnings: This is the total of the employee's normal wage and any extra income he or she generates or receives from other sources, such as housing and rent.
    • During the investment evidence filing process, an employee must provide information about alternative sources of income to his or her employer.
    • Different salary deductions: Section 80C/80CCC/80CCD deductions from wages, include contributions to instruments or programmes such as the Public Provident Fund (PPF), Life Insurance, Tax Saving Mutual Funds, Pension, and Tuition Fee Tax Deduction for Children, totaling up to Rs.1.5 lakh.
    • Salary Taxable: Under Chapter IV-A, various tax deductions are combined and then subtracted from gross income to determine net taxable income. This number is used to figure out how much tax you owe.
    • Education levies and surcharges, if any are imposed
    • If and when appropriate, a rebate under Section 87
    • If there is a rebate under section 89, it must be claimed.
    • Total tax owed on an employee's earnings, less any deductions, and any balance tax due or rebate due, if any.

ADV/6/22-23/597

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