Volume IconWhat is Form 16? | Everything about Form-16: Decoded

Here's all that you know, and you don't know, about Form 16, TDS certificate, Form 16 part A, Form 16 part B, Form 26AS, Income Tax portal, and things to remember as a taxpayer

ImageAnurag Sharma New Delhi

We are familiar with the wait for a document called Form 16 in order to file income-tax returns. Ever wondered what Form 16 really is and what it tells about the taxpayer?

Let's talk about the significance of one of the most important documents for taxpayers in India.

First, let's first understand… What is Form 16?
  • A certificate detailing tax deducted at source by your employer
  • Issued by an employer to its employee under Section 203 of the Income Tax Act
  • Contains all the information you need in order to file your income tax return

What does Form 16 contain?
  • Salary details
  • Tax already deducted

Basically, it provides details about the salary you have earned during a financial year and the amount of tax that has been deducted by your employer and deposited with the I-T department.

Is it mandatory for employers to issue Form 16?

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Yes, it is mandatory if any tax has been deducted at source from an employee's salary

What if an employee has changed jobs in the same financial year?
If you have changed jobs or worked for more than one employer at the same time during a year, and the tax has been deducted by more than one employer, you will be issued separate Form 16s by these employers.

Now, you must have noticed that every Form 16 has two components – Part A and Part B. What do these parts contain?

Part A of Form 16 provides details of the tax deposited in the government's treasury every quarter. It also has details of your permanent account number, your employer's tax deduction account number, and other such information. Your employer can generate and download Part A of Form 16 through the TRACES portal.

Contents of Form 16, Part A: 
  • Name and address of the employer
  • Employee's Permanent account number (PAN)
  • Employer's tax deduction account number (TAN)
  • Summary of quarterly tax deducted and deposited

On the other hand, Part B of Form 16 has a detailed break-up of tax computation, gross salary paid or credited, exemption or deduction claimed, and any other income declared by you, as an annexure to Part A of Form 16. In short, it's safe to say it is the detailed computation of tax on income of salaried employees.

Contents of Form 16, Part B:
  • Tax computation
  • Gross salary paid/credited
  • Exemption/deduction claimed
  • Any other income declared by the employee

Now, let's not confuse Form 16 with Form 16 A. They are not the same.
Form 16A is also a TDS Certificate. But while Form 16 is only for salary income, Form 16A is applicable for tax deducted at source on income other than salary.

What is Form 16A?
  • Details of TDS on income other than salary
  • All information in Form 16A is also available on Form 26AS

For example, Form 16A will be issued to you for tax deducted by a bank on the interest you've earned on fixed deposits, insurance commission, rent receipts, etc. All details in Form 16A are also available on Form 26AS.

So, what happens if no tax has been deducted at source? Does the employer still have to issue Form 16?
If no tax has been deducted, the employer need not issue Form 16. However, you can still request your employer to issue Part B of Form 16 in order to file your tax returns.

What if no tax is deducted?
No, the employer need not issue Form 16 if no tax is deducted
But the employee can still request the employer to issue Part B of Form 16 in order to file returns.

What should you do if your employer deducts TDS but does not issue a certificate? Well, in that event, your employer will be liable to pay a fine of Rs 100 per day under section 272A(2)(g) of the I-T Act, till it issues the certificate to you.

What if tax is deducted but Form 16 is not issued?
Employer liable to pay a fine of Rs 100 per day for any delay in issue of certificate to employee

Now, if your employer shut shop and did not issue you Form 16, does it mean that you do not have to pay tax or file a return? 
No, according to Section 139(1), if your total income in a particular tax period exceeds the basic exemption limit of Rs 2.5 lakh, you have to file the return of income, irrespective of whether Form 16 was issued or not. 

No tax if Form 16 is not issued by the employer?
No, anyone earning more than the exemption limit in a tax period must file returns  

Finally, here we have a few important points to remember as a taxpayer.

You need to ensure that all the information declared in Form 16 is true and correct. If any information is found to be incorrect, you should immediately get in touch with your employer and get the error rectified. In case Form 16 has not been issued to you, you can request your employer to issue it. You can also check whether or not your employer has deposited your TDS with the government by logging into your account on the Income Tax portal and downloading Form 26AS. 

And, the most important of all – even if your employer has not deposited the tax deducted from your salary into the account of the central government on your behalf, the burden of paying the tax is on you, not your employer.

Key points to remember:
  • All information in Form 16 should be correct
  • If there is any error, get it rectified immediately
  • Request your employer for Form 16 in case it has not been issued
  • Check on I-T portal if the employer has deposited TDS
  • Burden of paying tax is on you, not on your employer

First Published: Sep 27 2021 | 10:22 AM IST

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