Income Tax Return: If you are employed by a company, you might already be familiar with Form 16. Issued by employers, this document is essential for salaried individuals as it contains vital information about their income and taxes. Companies typically issue Form 16 on or before June 15 of the assessment year. If you have worked with multiple employers during a financial year, you must obtain a separate Form 16 from each employer.
The Importance of Form-16
Form 16 serves as definitive proof of income and taxes paid during the year. This document is crucial for filing income tax returns and acts as income proof when applying for loans or credit. It also helps verify if the taxes paid align with your earnings, ensuring accurate filings.
What Information is Recorded in Parts A and B of Form-16?
Part A: Basic Employer and Tax Details
Part A includes key employer-employee details and tax payment information, such as:
- TAN (Tax Deduction and Collection Account Number) of the employer
- PAN of both the employer and employee
- Address of the employer
- Employment period
- Assessment year
- A summary of TDS (Tax Deducted at Source) deposited to the government
Part B: Detailed Salary Breakup and Tax Exemptions
Part B provides a comprehensive breakdown of the employee’s salary and applicable deductions, including:
- Basic salary, house rent allowance, provident fund contributions, and professional tax
- Tax exemptions, such as HRA (House Rent Allowance) and medical allowance
- Deductions claimed under Chapter VI-A of the Income Tax Act, 1961 (e.g., Section 80C investments)
- Tax liability, taxes paid, and refund details
Why Employers Must Issue Form-16
As per the Income Tax Act, 1961, employers are required to issue Form 16 to employees earning over ₹2.5 lakh annually. Non-compliance can result in a penalty of ₹100 per day under Section 272 of the Act.
How to Download Form-16
To obtain your Form 16:
- Visit www.tdscpc.gov.in.
- Log in using your user ID, password, PAN, and captcha.
- Navigate to the “Downloads” section and select “Form 16.”
- Choose the financial year and enter your PAN details to download the form.
By understanding Form 16 and its components, you can ensure compliance with tax regulations and accurately report your income while availing yourself of eligible exemptions.
