Form 16 needs no introduction, as all the service class people are well acquainted with its necessity and benefits. However, people are usually confused about the details of the same, owing to which they make mistakes that turn out fatal on the business front.
To get your basics cleared and all your myths busted, here is a detailed Q n A on Form 16 that would make you an expert on the subject and you can flaunt your newly learnt knowledge in front of your colleagues – So, are you ready?
1. What is Form 16?
For a crisp definition, Form 16 is a certificate issued to salaried employees from their employer after the employer deducts tax from his employee’s salary. It validates the fact that the required TDS has been deducted and is deposited to the authorities on behalf of the worker. It is kind of an acknowledgement or a proof which ensures that the tax has been deducted from your salary and has been deposited with the income tax department.
It is one of the very essential documents and is issued in accordance with the provisions of the 1961 Income Tax Act.
2. What is the use of Form 16? Is it Really needed?
In simple terms, Form 16 is used to file Tax returns. The components of Form 16 necessarily include the tax paid, the tax return expected and it also helps in Tax planning. It stands important while clearing of tax credit. Moreover, its uses as an income proof certificate and for visa processing purposes turn out to be very helpful as well. Form 16 is very important for IT returns, to seek loans and also to carry forward losses.
It has two parts, about which we would learn in depth in later questions.
Yes, you do need Form 16 if you’re a salaried individual who is also a responsible citizen of the country paying all the due taxes on time.
3. Form 16 online for salaried Employee with example
Form 16 is one of the important documents needed to file your ITR and you have to obtain this document from your employer. Even if you have left your job, you can demand for an income tax Form 16 from your previous employer.
This part of the Form includes:
- Your gross salary (salary without any deductions) including any prerequisites received by you.
- All the allowances paid to you by the company, be it travelling allowance, housing rent allowance etc.
- Total income charged under salaries.
Here is what it looks like:
This section would include all the investments you have made, along with the tax benefits received by you for the same.
To upload the Form 16 online:
- Create an account on any website/e-filers that aids you in the upload of income tax online, for example, cleartax, policybazaar or mytaxcafe.com.
- Provide your personal information on the website. Save them and move to the next step.
- As mentioned above:
- In section A, enter the employer details.
- Enter the salary details.
- Provide all the rest Income and Investment Details.
- Report all the taxes paid.
- Upload your Form 16.
4. What is the difference between Form 16 Part A and Part B?
Part A: It includes the TAN details, which is the abbreviation of Tax deduction and collection account number. The details are included of both, the employer and the employee, along with their names and addresses. Moreover, the assessment year along with the tenure of the work done under the employer is mentioned.
Not only this, Part A also includes the summary of the Tax deducted from the employee’s income and deposited to the government in accordance with the quarterly TDS return filed by the employer.
Part B: It includes all the details of the salary paid to an employee in any financial year. All the deductions claimed under section 80 C are also mentioned along with the breakup of your wage.
All the deductions under Chapter VIA, deductions for EPF, PPF, NSC, life insurance premium or health insurance are mentioned in this section.
5. What is part A of Form 16?
The income tax Form 16-part A is generated and downloaded by the employer. The employer executes this task through the TRACES portal, which is the official TDS website. This is a very significant part and hence, before issuing the certificate, it is cross checked for authentication purposes, so as to verify the contents provided by the employer.
An important point that you wouldn’t want to miss out is that if you switch jobs in one financial year, each employer that you have worked under will issue a separate Part A of Form 16. The Form 16 Part A will be issued for the total period of your employment.
By now, you might have been curious about the contents of this part. Here are some of the major components of Part A –
- Name and address of the employer
- TAN & PAN of employer
- PAN of the employee
- Summary of tax deducted & deposited quarterly, which has to be certified by the employer
In a nutshell, this part of Form 16 mainly concerns with your personal details and the total tax you are eligible to pay.
6. What is Part B of Form 16?
In vivid words, this part of the income tax Form 16 is an annexure to the Form 16-part A. It primarily consists of computations where the tax is calculated after the deductions (Section 80C and other various allowances).
Here are some main components of Part B of the income tax Form 16:
- Taxable Salary
- Breakup of Section 80C Deductions
- Aggregate of Section 80C Deductions, which contains the record of Gross and deducted amount.
- The Tax Deducted at Source, i.e. TDS
- Tax Payable or Refund Due
In a nutshell, the Form-16 Part B is a complete detailed record of the salary received by an employee.
7. What is the difference between Form 16 and Form 16A?
To understand the difference between the two, we need to first know the basic definition of the two.
Beginning with Form 16, it is a certificate, where the employer certifies details concerning the salary an employee has earned during the tenure of one financial year. Moreover, it also covers the TDS that has been deducted. It is categorized into two parts, Part A and Part B. We have already learnt that Part A contains information of the employer & employee, like name & address, PAN and TAN details, the period of employment, details of TDS deducted & deposited with the government. Also, Part B covers details of salary paid, other incomes, deductions allowed, tax payable etc.
In cases of job change where you work under more than one employer during the year, you are expected to have more than one Form 16. In crisp terms, Form 16 is your salary TDS certificate.
Whereas Form 16A is applicable for TDS on Income earned besides the salary, unlike Form16 which is only for salary income. In cases where the TDS is deducted on any other income you receive that is liable for such deduction, a Form 16A shall be issued. Nonetheless, the Form 16A is also a TDS certificate, which also includes details such as the names and addresses of deduct or/deductee, the PAN/TAN details, challan details of TDS deposited. Not only this, the details of income you have earned and the TDS deducted and deposited on such income is also covered in the Form 16A.
All the information that is included in Form 16A is also available on Form 26AS, which is helpful in filing your return. However, in the case of Form 16, the details of Form 16 that are available in Form 26AS are only included if the TDS is deducted by the employer.
The two might be different, but they serve the same purpose, to smoothen your return filing process.
8. Who are eligible for Form 16? Who should submit Form 16?
If your net annual salary is less than Rs. 2.5 lacs, relax, you do not have to pay any taxes. If you are a senior citizen, then the maximum limit is raised to Rs. 3 lacs. As you already know by now that Form 16 is issued by the employer only if the TDS is deducted from your salary. If your salary is below exemption limit, no TDS would be deducted from your salary and hence, you do not need any Form 16.
In the same way, if your salary is above the exemption limit, you are bound to submit Form 16, being a responsible citizen.
9. How to get Form 16?
If your salary is above the exemption limit, you will require the Income Tax Form 16 in order to file your ITR. Following are the two ways to get your Form 16:
a. Ask for it from your employer
You can ask for Form 16 from your employer even if you are not working under him currently, in order to file the ITR of the respective financial year.
b. Download Form 16 online
You can download the income tax Form 16 from the online website of the Income Tax department. Generally, only employers are eligible to download this. This Form is available in the PDF Format, which you can download and get printed.
- Here are the steps that will help you to download the Form 16 online:
Visit the official website of the income tax department, http://www.incometaxindia.gov.in
On the search tab on the page, type Form 16.
A new page of search results would appear. Click on the first link to download Form 16.
4. Save it on your device.
a. How to download Form 16 from traces?
Here is the process to download Form 16 from the TRACES portal:
- The Deductor has to be registered at the TRACES portal.
- After on logs on the portal, they have to click on Form 16 and Form 16A section under the download section.
- A text file containing the entire requested PAN will be available for download under the download section of the menu.
- Most probably, the text file is password protected. The password is the TAN of the deductor.
- Pass the text files generated into the TRACES PDF Generation utility to create the PDF.
b. Can Form 16 be issued manually?
Yes. Your employer can hand over Form 16 to you directly. The employer generally issues the Form 16 to his employees around a month before the due date of filing the returns. You can ask for the same from your employer within a fiscal year even after you have left the job.
c. How to get Form 16 online for previous years?
The first step that you could try is approaching your employer to get the Form 16 for previous years. As the income tax Form 16 is generally issued by the employer, he could help you in the matter.
In case you have no contact with the employer, you can download the Form 26AS by logging into your Income Tax Portal with your personal credentials.
d. How to get Form 16 for pensioners?
In case you are a pension holder, you can easily obtain the Form 16 from the bank which pays you the pension. Not only this, if there is a treasury or a pension disbursing officer that pays your pension, you can request them for Form 16 if your pension falls under the taxable bracket. They are the bodies responsible for collecting TDS of Income Tax if your pension falls in the taxable bracket.
The Form 16 will usually contain details of your pension, savings and the total TDS deducted.
11. How to open Form 16?
The income tax Form 16 is password protected and you need a password to access the Form 16. After downloading the Form 16, you are required to provide a password to be able to view it. The default password varies from company to company but here is what works for most people:
a. Your PAN card with your DOB in DDMMYYY Format. For example, For Ex: if your pan is ABCD3456L and your DOB is 27-04-1997, the password will be abcd3456l27041997. Remember to keep the text in lowercase.
b. Your PAN number.
12. Details required from Form 16 while filing your income tax return
Here is the information that you need from your income tax Form 16 while filing your income tax return:
a. The TDS Deducted by the employer
b. TAN of Employer
c. PAN of Employer
d. Name and Address of Employer
e. Current Assessment Year
f. Employee’s (Taxpayer’s) Name and Address details
g. Employee’s PAN card number.
13. How to file ITR (Income Tax Return) with Form 16?
Before you start the tax filing process, you need to make sure that you have all the important documents handy. Documents like the Form 16 issued by your employer, a copy of last year’s return, etc.
Next, visit the website https://www.incometaxindiaefiling.gov.in/home.
Here are the steps to file your ITR using Form 16:
Step 1: Register yourself on the website. Your user ID will be your Permanent Account Number (PAN).
Step 2: Study your tax credit statement in the Form 26AS for the financial year 2016-17. The statement is supposed to reflect the taxes deducted by your employer and actually deposited with the government. Note that the TDS in your Form 16 must match with the figures in Form 26AS. You may get a notice from the I-T department in case of any discrepancies.
Step 3: Under the ‘Download’ tab, click on Income Tax Return Forms and choose AY 2017–18 (for the financial year 2016–17). Download the Income Tax Return (ITR) Form that is applicable to you.
Step 4: Once downloaded, open the Return Preparation Software (excel or Java utility) and fill in the Form by entering all the required details by using your all documents.
Step 5: Calculate and verify the tax payable by you by clicking the ‘Calculate Tax’ tab. Pay tax (if there is any tax applicable) and enter the challan details in the tax return.
Step 6: By selecting the ‘Validate’ tab, you will confirm all the information entered in the worksheet.
Step 7: Do not forget to generate an XML file and save it on your local device, for example, your computer.
Step 8: Next, you need to go to ‘Upload Return’ on the portal’s left panel and then, you have to upload the saved XML file after selecting ‘AY 2016-2017 ‘ and the required Form. You will be asked if you wish to digitally sign the file. If you have obtained a DS (digital signature), choose Yes. Otherwise, No.
Step 9: After the website prints the message of successful e-filing on your computer screen, you may consider the process to be finally completed. Soon after that, you would see that the acknowledgement Form Verification (ITR-V) will be generated and you can download and save it for future reference.
Step 10: You could verify online if you wish to, with EVC Pin. Nonetheless, you can also print the Form ITR-V, sign it yourself(preferably in blue ink) and send it only by ordinary or Speed post to the Income-Tax Department-CPC within 120 days of filing your return online.
You might go ahead and file your ITR yourself, however, it is advisable to go to a CA or a Tax Preparer who know the process better and help you in a better way,
14. How to file ITR without Form 16?
To revise, Form 16 is a basic document that you need to file your ITR every year. However, there might be a chance that you could not get your Form 16, and hence you are starting to freak out. While there might be many reasons as to why you couldn’t get the Form, it isn’t that big a problem. Filing the ITR without Form 16 seems impossible to many salaried people, but it isn’t that big an issue.
There are several documents that one can use as a reference to file his ITR in case he does not have a Form 16. All the salaried people without a Form 16, you can sit back and relax as here is a step by step process for you to follow while filing your returns:
Step 1: Calculate the taxable income from your salary.
You must keep a record of all the pay slips that you receive from your employer within the fiscal year. The salary slips are the main source of information so you cannot lose them. Your salary slips generally provide the figure for the fields required to be filled while providing the complete breakup of one’s salary in his ITR. These fields are salary or Pension, Unexempted allowances, Value of perquisites, Profit in lieu of Salary, and deductions claimed under section 16.
Moreover, if you have worked under more than one employer within a year, you should include the salary slips from all of them.
Step 2: Find the TDS deducted from your salary.
The Form 26AS can help you out here, as it contains the information of the TDS deducted on both – your salary income as well as your other incomes. Make sure the figures on the Form 26AS match with the TDS deducted because discrepancies are not good news and you might need to talk to your deductor in such a situation. Also, you might as well know by now that you can download the Form 26AS from the TRACES portal.
Step 3: The Income earned from house properties.
If you have let out any of the house property owned by you, you are required to report the rent earned under this tab.
Not only this, if you have taken a house loan and are paying interest on it on the let-out property or self-occupied property, you need not to worry as you are eligible for deductions of the same.
Step 4: Income earned through capital gains and other sources.
If you have invested your money smartly in mutual funds, you need to get a summary statement regarding the same from your broker. However, there’s good news – the gains shall be exempted if held for a year or sold before/on March 31, 2018.
The income earned from bank deposits, RDs, FDs etc. also need to be specified while Filing your ITR. The income earned comes under Taxable income and hence, needs to be shown clearly.
You are bound to report the capital gains from the sale of mutual funds, shares, flat, land, etc. if you have received any.
Step 5: Claim all tax deductions and benefits.
There are various sections under which you can claim deductions – for example, Section 80C (Life Insurance, Employee Provident Fund, equity-linked savings schemes, Public Provident Fund etc.), 80D (Medical insurance premium), 80E (Interest on education loan).
An important point to note here is to know the maximum limit up to which the tax can be exempted, for instance, Under Section 80C, deductions can be claimed up to Rs. 1.5 lacs.
Step 6: Calculate the net taxable income.
Subtract all the deductions from your total income from various sources. The figure obtained is your taxable income. You can compute the tax on this amount using the IT slab rates for the respective financial year.
Step 7: If required, pay additional tax.
It might be possible that you find the total tax paid by you in the fiscal year is less than what is actually payable as per the Form 26AS. You can simply pay the rest of the amount online.
Step 8: Finally, File your ITR
The best and the most hassle-free way would be to e-file your income tax return, without needing Form 16. However, don’t forget to e-verify the same within 120 days.
15. What happens if an employer doesn’t give Form 16?
All in all, it depends solely on the fact that whether TDS has been deducted from your salary or not. It might be possible that your salary is within the tax-exemption limit and hence, no tax id deducted – so the employer does not issue a Form 16 to you.
If any employer deducts TDS and does not issue a Form 16, he may be liable to pay a penalty, because any employer who pays salaries and deducts tax at source is compulsorily bound to give its employees a certificate of the tax deducted, in the Format of Form 16.
As stated above, if an employer refuses or fails to issue Form 16 to its employees, he may be charged a penalty of Rs.100 each day, until he issues the certificates, as specified in the Act.
Also, you can file your Income Tax Returns without a Form 16 too, as answered in the questions above. Form 16 does make the process smooth and convenient, but they’re not the only option.
16. How to generate Form-16A for payments other than Salary?
You can download the Form 16A from the TRACES portal and it is treated as a valid TDS certificate too. Keep in mind that it is only generated for a valid PAN.
Here are the steps to generate the Form 16A:
Step 1: Request for the Form 16A
There are many portals that can help you to get your Form-16A. You can go to these portals, for example, www.cleartds.com and then under the Deductor section, select “Work on this return”.
You would see “Import from TRACES” somewhere at the bottom at the page. Clicking on this would request the Form16A.
Fill up the TAN, Token number (Ack.number), Challan details manually.
Submit the request to TRACES by clicking “Submit the request” After clicking on the button, you would be asked for a CAPTCHA for verification. Enter it right and submit. The request is sent after that and is generally processed after 4 hours.
Step 2: Handling the zip file.
After your request is processed, the status would become “Available” and you would see a “Download” option there. Clicking on it would download the Form-16A zip file. The file is protected by a password, the password being your TAN number in capital letters.
The zip file contains a text file which needs to be converted to a PDF.
Step 3: Generating a PDF file.
You have to click on “Return to Dashboard” and once you do that, select the option “Generate Form-16A”. After you browse the file, you upload the .txt file and select “Generate”. This would create one zip file for all the Form-16A PDF files.
Unzip it, and voila! You have your Form-16A!
17. If I switched jobs how can I deal with Form 16?
Switching jobs is a very normal phenomenon and you do not have to stress over the Form 16 in such conditions.
All you have to do is ask all your previous employers (within a year) to issue your Form 16. In the case of multiple Form 16 documents, the tax computation would be made after considering every Form 16 document.
If you cannot contact your previous employer, you can use the pay slips received from that employer and that can be used to file the ITR without Form 16(answered in the questions above)
Yes, it is that simple!
Well, we hope to have cleared all your doubts regarding the Form 16 and Filing of ITR. Now go and fulfil your basic responsibility like a pro and thank us later, guys!