What is Form 16?

Form 16 is a certificate that employers issue to their employees. It is a validation that the TDS has been deducted and deposited with the government authorities on behalf of the employee of the organization.

Form 16 gives a detailed summary of the salary paid to the employees and the deducted TDS. TDS Form 16 contains all the information that an individual needs to prepare and file the income tax return.

The employers are required to issue a Salary TDS certificate every year on or before the 15th of June of the coming year immediately after the financial year in which the tax is deducted. There are two components of Form 16 Part A and Part B. If an individual loses Form 16 he can request a duplicate Form from the employer.

IndiaFilings can help you manage TDS compliance online. Our TDS experts will help you file all the TDS returns pay any overdue TDS deposits and also the issuance of Form 16 to the employees.

Structure of Form 16.

Part A of Form 16

It provides the details of the TDS that is deducted and deposited. This form can be generated by the employers through the TRACES portal.

The employer must verify the contents before issuing the certificate. Here are a few components of Part A of the salary TDS certificate.

Name and address of the employer
TAN and PAN of employer
PAN of the employee
Summary of tax deducted and deposited quarterly, which is certified by the employer.

Part B of Form 16

It is an annexure to Part A, Part B is prepared by the employer for its employees and it contains details of the breakup of the salary deductions approved under Chapter VI-A. In case of a job change in one financial year, Form 16 should be obtained by both employers. Some of the components of Part B are:

Detailed breakup of salary
Detailed breakup of exempted allowances under Section 10
Deductions that are allowed under Income Tax Act (Under Chapter VIA)

Here is the list of deductions

Deduction for life insurance premium paid, contribution to PPF, etc. under Section 80C
Deduction for contribution to pension funds under Section 80CC
Deduction for employee's contribution to a pension scheme under Section 80CCD(1)
Deduction for taxpayer's self contribution to a notified pension scheme under Section 80CCD(1B)
Deduction for employer's contribution to a pension scheme under Section 80CCD(2)
Deduction for health insurance premium paid under Section 80D
Deduction for interest paid on loan taken for higher education under Section 80E
Deduction for donations made under Section 80G
Deduction for interest income on savings account under Section 80TTA

Deposit of Tax to Government by Employers.

The deducted tax from the employees' salary should be deposited by the employer along with an income tax challan ITNS 281 on or before the 7th of every month for the previous month.

Recently, from 2008 all the corporate assessees and assessees are subject to tax audit are required to make all the TDS payment online through an internet banking facility.

An assessee can also make payment of taxes from the account of any other person. However, the challan for making should indicate the PAN of the assessee on whose behalf the payment is made.

Issuance of Form 16 to Employees.

After the TDS returns are filed by the employer, the Government would issue TDS certificates to the employer - which in turn is provided to the employees.

Form 16A provides details about TDS from salary. Form 16B provides details of TDS Other than salary, Form 16C for TDS under Section 194-IB, Form 16A for TDS from other than salary, and Form 27D for TCS.

The due date for issuance of Form 16 is on or before June 15th of the financial year immediately following the financial year in which the tax is deducted. In the case of Form 16A, the same should be issued every quarter.