form 16

Form 16, also known as the TDS (Tax Deducted at Source) Certificate, is a document issued by an employer to their salaried employees. It provides a detailed summary of the salary earned, tax deductions, exemptions, and the total TDS deducted and deposited on behalf of the employee during a financial year. Form 16 is an essential document for salaried individuals when filing their income tax returns, as it helps them compute their taxable income and claim credit for the tax deducted at source.

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Mysteries of Form 16: Your Ultimate Guide to Understanding and Using This Essential Tax Document

Form 16, also known as the TDS (Tax Deducted at Source) Certificate, is a document issued by an employer to their salaried employees. It provides a detailed summary of the salary earned, tax deductions, exemptions, and the total TDS deducted and deposited on behalf of the employee during a financial year. Form 16 is an essential document for salaried individuals when filing their income tax returns, as it helps them compute their taxable income and claim credit for the tax deducted at source.

Form 16 has two parts: Part A and Part B.

Part A of Form 16 contains the following information:

  1. Name and address of the employer
  2. TAN (Tax Deduction and Collection Account Number) of the employer
  3. PAN (Permanent Account Number) of the employer
  4. PAN of the employee
  5. Summary of the TDS deducted and deposited on a quarterly basis
  6. Assessment year, i.e., the financial year following the year in which the income was earned
  7. Period of employment with the employer
  8. TDS payment details, including the BSR code of the bank branch, date of deposit, and challan serial number

Part B of Form 16 provides a detailed breakdown of the following:

  1. Gross salary: This includes the basic salary, dearness allowance, house rent allowance, transport allowance, and other allowances.
  2. Exemptions under section 10: These exemptions include house rent allowance, leave travel allowance and others.
  3. Income chargeable under the head ‘Salaries’: This is the gross salary minus exemptions under section 10.
  4. Deductions under section 16: These include the standard deduction, entertainment allowance, and tax on employment.
  5. Income chargeable under the head ‘Salaries’ after deductions under section 16.
  6. Add any other income reported by the employee, such as income from house property or other sources.
  7. Deductions under Chapter VI-A: These include deductions under sections 80C, 80D, 80E, 80G, and others.
  8. Total taxable income: This is the income after considering all exemptions, deductions, and other incomes.
  9. Tax on total income: This is the calculated tax liability based on the applicable income tax slab rates.
  10. Rebate under section 87A, if applicable.
  11. Total tax payable after considering rebate and surcharge, if any.
  12. TDS is deducted and deposited by the employer.

Employers must issue Form 16 to their employees by May 31st following the end of the financial year (April to March) in which the salary was earned. Employees should carefully review Form 16 to ensure the accuracy of the information provided and use it to file their income tax returns correctly.

When Will Form 16 Be Available For 2022-23?

Form 16 is issued by employers to their salaried employees after the end of a financial year. For the financial year 2022-23, the financial year will end on March 31, 2023. Employers are required to issue Form 16 by May 31, 2023, which means that Form 16 for the financial year 2022-23 should be available to employees by May 31, 2023.

Detail Required for Form 16?

Form 16 is an essential document for salaried individuals when filing their income tax returns, as it contains a comprehensive record of the salary earned, deductions, exemptions, and the TDS deducted during a financial year. Here are the key details you need to consider from Form 16 while filing your income tax return:

  1. Personal details: Form 16 includes your name, PAN, and employer’s TAN. Make sure you enter these details accurately while filing your return.
  2. Salary details: Use the information provided in Form 16 to report your salary income. This includes your gross salary, exemptions under Section 10 (such as HRA, LTA, etc.), and deductions under Section 16 (like the standard deduction and professional tax).
  3. Deductions under Chapter VI-A: Form 16 provides a detailed summary of deductions claimed under Chapter VI-A, such as Section 80C (investments in PF, life insurance, etc.), Section 80D (health insurance premium), Section 80E (education loan interest), and Section 80G (donations). Use this information to report deductions accurately in your income tax return.
  4. TDS deducted: Form 16 shows the TDS deducted by your employer each quarter and the total TDS deducted for the financial year. Use this information to claim credit for the TDS deducted while filing your income tax return. You can also cross-check this information with your Form 26AS to ensure that the TDS has been correctly deposited by your employer.
  5. Income from other sources: If you have declared income from other sources to your employer, such as income from house property or interest income, it will be reported in Form 16. Use this information to report your income from other sources in your tax return.

     

  6. Tax payable or refund due: After considering all the income, deductions, and TDS, Form 16 provides the tax payable or refund due for the financial year. This can be used as a reference when filing your income tax return.

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