Form 16 : How to Download, Fill & Upload

Form 16 or Salary certificate is issued to salaried professionals in India by their respective employers as per the Section 203 – Income-Tax Act 1961. It contains complete information about the salary given by the employer to the employee in a particular financial year along with the deducted income tax from the salary of the individual by the payer. According to the Income Tax Act, every employer is required to deduct TDS (tax deducted at source) at the time of paying salaries. The TDS is calculated on account of the income tax slab rates in force for that financial year.

Form 16 is proof that the tax deducted has been deposited by the employer with the Income Tax department. Organisations need to issue Form 16 to their employees by 31st May of the financial year immediately following the financial year during which tax was deducted.

Components of Form 16

Form 16 is sub-divided into two parts viz: Form 16 Part A and Form 16 Part B.

Form 16 Part A

This part is a certification which is signed by the employer that they have deducted the tax from the salary of their employees and duly deposited it with the income tax department. It contains the summary of tax which is collected by the employer from the salary of the employee.

It encompasses the following details:

• Personal information of the employer and employee.
• PAN details of employer and employee.
• TAN details of the employee. It should be noted that if any organisation doesn’t have a TAN then it cannot deduct TDS of its employees and henceforth will not require Form 16.
• The Assessment Year (AY)
• The time period for which the person was employed with the employer in the concerned Financial Year
• Summary of the salary paid
• Date of tax deduction from the salary
• Date of tax deposit in the account of government
• Summary of tax deducted & deposited quarterly with the Income Tax Department
• Acknowledgement Number of the TDS Payment

Part A of Form 16 is generated and downloaded through the Traces portal of the Income Tax department and encompass details about bank’s BSR code, challan number etc.

Form 16 Part B

This part comprises of the information about the income earned by the employee along with the exemptions and deductions applicable thereon, in the prescribed format. It contains the following information:

• Total Salary Received
• Exemptions Allowed: It also mentions allowances given to employees for Conveyance, Housing rent (HRA), Children education and hostel expenditure, medical, etc.
• Gross Income: It is the total income which includes the salary along with the income earned from house/property etc. The employee needs to share information about other income with the employee during investment proof submission.
• Deductions From Salary: It encompasses all the contributions which the employees make towards schemes like Life Insurance, PPF, tax saving mutual funds, pension, Sukanya Samriddhi etc. These are covered under Sections 80 C / 80 CCC / 80 CCD.   The maximum limit for these is Rs. 1,50,000.
• Deductions under other sections. These include deductions made towards premium paid for health insurance or Mediclaim (80D), EMI on education loan (80E), donations (80G), and other deductions. The employee needs to submit the details of these deductions to the employer along with supporting documents.
• Net Taxable Salary: Total deductions are aggregated under “Chapter IV-A” constitutes the total income after total deductions are reduced from the gross income. The tax liability of the person is calculated on net taxable salary.
• Education Cess and surcharges if any
• Rebate under Section 87, if applicable
• Relief under Section 89, if any
• The total amount of tax payable on income
• Tax deducted and the balance tax due or refund applicable

Types of Form 16

Apart from Form 16, the two other types of Form 16 are Form 16A and form 16B.

Form 16A:

Form 16A is applicable for the tax deducted at source on the income generated from other sources like interest earned from FDS, rent receipts, insurance commissions etc. The form gives information about the income earned and the tax deducted and deposited on it.

Form 16B:

Form 16B is a TDS certificate for the tax which has been deducted on the sale of immovable property and deposited by the buyer with the Income-tax department.

Who are Eligible for Form 16?

Those salaried individuals who come under the tax bracket are required to fill the Form 16. A company is legally bounded to give the form 16 to its employees.

How to Download Form 16?

Form 16 is issued by the employer to its employees whose TDS is being deducted from their salary.  Not anyone can download Form 16.

• It is very important to note that Form 16 cannot be downloaded on own by individuals by visiting the TRACES website and submitting their PAN card details. It is only the employer who is bounded to give Form 16 to its employees.
• Form 16 is proof that the employer has submitted the tax deducted from the salary with the Income Tax department.
• The employer is supposed to issue Form 16 before May 31 of every financial year.

How is Form 16 important for a salaried individual?

Proof of TDS: From the income tax point of view, Form 16 is one key document. Every salaried individual must seek the Form 16 from their employer as proof that the tax which the employer has deducted from the salary has been duly submitted with the government.

Filing of Income Tax Returns: With the TDS certificate in hand, it is very convenient for the individuals to file their income tax return without taking help from any CA or advisors.

Verify taxes: With the help of Form 26AS, one can easily verify if correct taxes are deposited with the Income-tax department.

Income Proof: Form 16 is considered as a valid income proof by banks, NBFCs and other lenders during the loan application and verification process.

Employment process: Form 16 is asked by some organisations during the on-boarding process. Thus it is important to keep one’s Form 16 from the previous employers as well.

Visa requirements: Form 16 is required to be submitted for visa purposes.

Multiple employers in a financial year

Every employer is liable to give Form 16 to their employers. So, even if a person is changing many jobs in a year, then he will receive the form16 from each employer.

What to check in Form 16?

• Check if all the details mentioned in Form 16 are correct.
• Verify personal information along with income details and tax deducted.
• Check if the PAN number is correct. It is an important aspect which needs to be corrected immediately. Even the employer needs to revise the return of tax so that the TDS credit is against the correct PAN.

Responsibility of the employer with respect to Form 16

• The employer must ensure that all the details of the employee are correct in Form 16.
• Special alertness should be given while checking the PAN of the employee.
• Each page of the form should be signed by a responsible person of the company.
• The employer should issue Form 16 to its employees on or before the due date i.e. 31st May.

Is Form 16 and Form 16A similar?

Although many people consider the Form 16 and 16A as same, there are quite a few differences. The only similarity being the fact that both are TDS certificates.

• Form 16 is issued to salaried individuals by their employers. Whereas Form 16A is issued to non-salaried individuals for income earned from other than salary.
• Form 16A is also granted to consultants and professionals who are not employed with the organisation but render their service and charges fees for it.

Tax-return and Form 16

Filing of income tax return requires Form 16. The employer must share the details of his other incomes as well with the employer so that the relevant information can be added in form 16 and the tax return is done correctly.

Employers uphold the responsibility of deducting tax on the salaries and issuing TDS certificate to the employees. If however, they fail to do so then according to Section 272A(2)(g) of the I-T Act, they need to bear a penalty of Rs. 100 per day of default.

If the employer is not giving or denying the certificate, then chances are there that the tax has been deducted by the organisation but not deposited with the IT department. In that case, employees can get in touch with the concerned Assessing Officer so that he can take appropriate action against the employer.

But that doesn’t mean that the employee is exempted from filing tax returns. Form 26AS, TDS certificate from bank, rent receipts, tax saving investment proofs along with salary slip can be used to file the ITR.

Preserving Form 16

Even though Form 16 is not attached alongside the income tax returns, still it is advisable to preserve the document for 6 years at least.