What is Form 16? All you need to know

Form 16 is essentially a certificate issued by employers to their employees containing details of their income, Tax Deducted at Source (TDS), and other information. It provides a validation that TDS has been deducted and deposited with the government authorities on behalf of the employee by the employer. The Central Board of Direct Taxes (CBDT) has recently made amendments in the annual salary TDS certificate issued to employees in Form 16. But before getting to the new changes, let’s learn about the Form 16 in detail.

Form 16 contains the information needed for you to prepare and file your income tax return. It essentially shows the break-up of your income and the TDS amount deducted by the employer. Form 16 has two components, Part A and Part B.

Form 16A provides details of TDS deducted and deposited quarterly, the details of PAN and TAN of the employer, and other information. The employer generates this part of Form 16 through the TRACES portal and authenticates its contents before issuing the certificate.

Employees, who change jobs within one financial year, should get the Form 16 from each employer separately for the period of employment.

Components of From 16 Part A are:

Name and address of the employer

TAN and PAN of employer

PAN of the employee

Summary of tax deducted and deposited quarterly (certified by the employer)

The Part B of Form 16 is an Annexure to Part A that is prepared by the employer for its employees. It contains details of the break-up of the salary and deductions approved under Chapter VI-A of the Income Tax Act.

After CBDT amendments in Form 16, some of the components of Part B notified newly are:

Detailed breakup of salary

Detailed breakup of exempted allowances under Section 10 and details of deductions under Chapter VI-A

Also, these new fields have been introduced:

Income (or admissible loss) from house property reported by employee offered for TDS

Income under the head ‘Other Sources’ offered for TDS

A new field for reporting the total amount of salary received from other employers

A new field for standard deduction allowed under section 16 of the Income Tax Act.

All salaried persons whose employers have deducted tax at source from the salary are eligible for Income Tax Form 16.

In case the individual fall under the tax exempted category but their employer has made the tax deductions, he/she needs to issue an ITR Form 16.

Form 16 is needed to easily file your income tax returns. It is proof/certificate that the employer has submitted the money to the authorities that it deducted as TDS from your salary. It also provides details of the computation of taxes based on the investment declarations you made at the beginning of the financial year.

Step 1: Visit the official website of the Income Tax Department at incometaxindia.gov.in

Step 2: Click on ‘Income Tax Forms’ under the ‘Forms/Download’ section

Step 3: You can choose from PDF or Fillable Form options.

Step 4: Click on ‘PDF’ to download the Form.