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  • Form 16 for Income Tax Filing With Example

    What is Form 16?

    Form 16 is an Income Tax form used by companies to provide their salaried individuals in India. This form carries all the required details that help the employee in filing their tax returns with the Income Tax department in India. The Income Tax Act of 1961 and the Income Tax rules of 1962 are the laws that are prevailing in India. When a Form 16 is provided to an employee by their employer it’s a source of proof of filing their Income Tax returns, the form has various components such as Salary Income components of the employee. Every employer should provide their employees with the Form 16 who fall under the tax brackets set up the Finance Ministry of the Government of India. If an employee doesn’t fall under the tax brackets set, then he/she doesn’t receive the Form 16 as he/she will not need to pay taxes neither will they need to have Tax Deducted at source or TDS.

    These components are:

    • The personal details of the employee, like name, Permanent Account Number (PAN) etc.
    • The employer details, name, PAN, Tax deduction and collection Account Number (TAN), etc.
    • An acknowledgement number of the taxes paid by the employer.
    • Details of the salary; Gross salary, net salary, deductions, perks etc.
    • Total income and tax deductions.
    • Education cess and surcharge details.
    • Taxes deducted as per sections 191A.
    • Declaration of tax payments from the employer.
    • Refunds in any to the employee, or balance of taxes payable by the employee.
    • Receipt of the TDS paid.
    • All details of the tax payment, like Challan number, cheque number, Demand Draft number etc.

    The Form 16 has 2 parts, Part A and Part B:

    The Part A of the Form 16 contains the TAN of the employer and PAN of the employer and the employee. The addresses of both the employee and employer. This will contains all details of the pay-outs from the employer and employee during the current financial assessment year. This part of the Form 16 also contains the TDS filed by the employer, the taxes deducted from your income and paid to the government every quarter. This also contains a monthly statement of the same.

    The Part A of the Form must include:

    • TDS deducted by the employer.
    • PAN of the employer.
    • The current financial assessment year.
    • The employee PAN.
    • TAN of the employer.
    • The employee/tax payer's name, address etc.
    • Name and address of the employer.

    The Part B of the Form 16 contains the consolidated details of the salaries paid to the employee during the financial assessment year. The salary must be broken down, with details of deductions made by the employee under section 80C. The deductions that can be made under this section is EPF, NSC, Life insurance premiums, PPF, etc. If in one financial assessment year employee has changed jobs then the employee needs to be provided Form 16 of both companies.

    The Part B of the Form must include:

    • Taxable salary of the employee.
    • TDS by the employer.
    • Breakup of the deductions of sections 80C.
    • Aggregate of the section 80C with gross and deductible amount.
    • Tax refund or any payables due.

    How to Fill the Form 16?

    Filling out of the Form 16 as shown below:

    The Part A of the form will be…
    Form - 16 - Part A
    • Name and address of the Employer: Will be the employer details.
    • Name and designation of the Employee: Will be the employee details as per company records.
    • PAN of the deductor: Permanent Account Number of the Employer.
    • TAN of the deductor: Tax deduction and collection Account Number of the Employer.
    • PAN of the employee: employee’s Permanent Account Number.
    • CIT (TDS): This is the Income Tax Commissioner’s office details.
    • Assessment year and period: Is the current financial year and financial year beginning 1st April and ending 31st March.
    • Summary of the quarters mentioned the company.

    The Part B of the form will be as below:

    Form - 16 - Part B

    Under this section:

    • Gross salary will be your salary without any deductions plus any prerequisites that you receive.
    • Allowance that the company pays you, like travel allowance, house rent allowance etc.
    • The total income chargeable under salaries.
    • Gross total income will be the amount on which your taxes will be calculated.
    Form - 16 - Part B - Page 2

    Under this section you will have all the investments made by you and would have received the tax benefits for the same.

    How to Get the Form 16?

    This document is generally issued by your employer, and is more commonly known as a salary certificate to the common man. This is issued for the present financial year and reflects the total earnings and total income taxes deducted for that financial year. For a salaried individual this document is very important to show his/her income tax returns. To get the Form 16, you could download the Form from the online website of the Income Tax Department. The form is available on their website in a PDF format and a fillable form as well.

    When is Form 16 Required?

    When you file your Income Tax returns for a year with the Income Tax department, and your employer also files the taxes on your behalf which are deducted at source (TDS), the Form 16 is required. Most banks and financial institutions use this document as a part of their verification process when you apply for a loan or any kind, be it a housing loan, consumer loan, vehicle loan, personal loan etc.

    News About Form 16

    • Date For Filing Income Tax Returns Extended To August 5

      The Income Tax Department has extended the deadline for filing Income Tax Returns from July 31, 2016 to August 5, 2016. This was done to make up for the strike by public sector banks.

      Taxpayers in Jammu and Kashmir, which is in a state of tumult, have up to August 31 to file their returns.

      The tax returns can be filed either online through the Income Tax E-filing portal, or through a tax expert or chartered accountant. For filing the returns, you need to have your Forms 16A and 16B, and the proofs of investment.

      3rd August 2016

    • Time for you to get your TDS Certificates

      Taxpayers can start collecting their TDS Certificates because May 31 was the last date for tax deductors to finalise and issue them. If your employer has not provided you with Form 16 and 16A, they are liable to pay a penalty.

      The penalty can be up to Rs. 100 per day per certificate, but cannot exceed the tax amount deducted. While employers have to send Form 16s to their employees by May 31 (for the previous financial year), other TDS deductors such as banks have to issue Form 16A every quarter, by July 30, October 30, January 30 and May 30.

      So ideally you should have all your TDS certificates by now, but most employers finish the task of distribution of the Form 16s during the first week of June.

      3rd June 2016

    • Income Tax Department To Clamp Down On Fake Bills

      The Income Tax Department announced on Tuesday that changes would be made with regards to the reporting format for those individuals looking to avail of tax deductions on leave travel allowance (LTA), leave travel concessions (LTC), house rent allowance (HRA) and interest paid on home loans. The IT Department is looking to implement the changes with a view to clamping down on claims made by taxpayers with fake rent receipts or leave travel expenses. CEO and Co-founder of BigDecisions.com, Manish Shah, stated that additional details will be asked during the tax exemption claim procedure in an effort to plug leakages under tax provisions. Previously HRA exemption would be ascertained by the employer and included in the Form 16 of the employee as long as the rent receipts were provided in time.

      9th May 2016

    • Not all Donation will be eligible for Tax Deductions

      An individual who has made donations towards political parties, charitable institutions, etc, can file a claim for a tax deductions while filing their IT returns before 31st August 2016. Salaried employees if have not had this calculated in their Form 16 then, it can be while filing returns. This deduction can be claimed under Section 80G along with a receipt. The rate of deduction allowed is 50% and if the donation is made with a social purpose or a importance of the country then a 100% deduction will be permitted. Such as National Defence Fund, the Prime Minister’s National Relief Fund, the National Children’s Fund and the National Foundation for Communal Harmony Fund.

      2nd March 2016

    • By Due Date is Form 16 not issued Employer can be given a Penalty

      Form 16 is essential while filing a tax return, if you’re a salaried employee. If an employer doesn’t cut the TDS for an employee, then he isn’t required to provide the employee with the Form 16. But if there is a TDS deduction, the employer should issue the forms by 31st May of that year. For each day delayed in issuing the forms the employer is liable to pay a penalty fee of Rs. 100 until the form is issued.

      18th February 2016

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