Form 16 is a certificate given by employers that provides a detailed summary of salary and the taxes deducted at source (TDS). It’s important for filing the income tax return, acting as proof that the employee has paid taxes on time. This form is important for every salaried person, making tax filing easier and ensuring that they comply with the income tax laws. Find out all you need to know about Form 16, Form 16A, the benefits of Form 16, why is it important, and how to download Form 16 in this blog.
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What is the Form 16?
Form 16 is a certificate issued by your employer that presents in detail the salary you earned and the tax deducted from your salary (TDS) over a financial year and when it was submitted to the income tax department. It is important to get this certificate every month before June 15th. You should get Form 16 from every employer you worked with during the financial year.
Form 16 is divided into two parts as follows:
- Part A: This section includes details such as the employer’s and employee’s name, address, PAN and TAN, and the summary of tax deducted and deposited quarterly. It is generated and downloaded from the TRACES portal.
- Part B: This part is an annexure to Part A. It contains detailed information about the salary paid, other income (if any), deductions claimed, and tax payable. Part B is prepared by the employer.
For example, Imagine Rishi has worked for two different companies in one year. Company A employed him from April to August, and Company B employed him from September to March. Each company will give him a separate Form 16 showing the salary paid and the TDS deducted during Rishi’s working time with them and when they gave the deducted tax to the tax department. Rishi will use these Form 16 certificates to file his income tax return.
Also read: ITR Filing for NRIs AY 2024-25: Step-by-Step ITR Filing Process
What is Form 16A?
Form 16A is a TDS (Tax Deducted at Source) certificate like Form 16 but it is for income other than salary. It is issued when TDS is deducted on various incomes, such as interest on fixed deposits, insurance commissions, and rent receipts. If your bank deducts TDS on the interest earned from your fixed deposit, they will issue a Form 16A detailed certificate about this deduction. This form will include information about the deductor (like the bank) and the deductee (you), along with PAN/TAN details and TDS deposit details. All the information in Form 16A can be found in Form 26AS and is necessary for filing your tax return. Like in Form 16 which only shows TDS on salary, Form 16A provides a detailed view of TDS on other types of income.
Also read: NRI Tax on Rental Income: Rules, Rates and More
Eligibility for Form 16?
There are certain eligibility criteria to be eligible for Form 16:
- If you earn a salary, then your tax gets deducted by the employer and you will be eligible to get form 16.
- Whether your income is below the tax exemption limit or not, if your employer has deducted tax from your salary then you will get a Form 16.
Why is Form 16 Important for Salaried People?
- Form 16 acts as proof that you have paid Tax on time.
- Form 16 verifies the authenticity of the income earned by an employee and validates and makes it a recorded report with the Indian government.
- Individuals earning less than 2.5 lakh in a financial year are not included in the deduction of TDS.
- Individuals earning a higher salary need to pay TDS and they are eligible for Form 16.
How to Download Form 16?
TRACES (TDS Reconciliation Analysis and Correction Enabling System) is an online website by the Income Tax Department of India. TRACES is used to manage TDS-related activities and provides services to employers, taxpayers, and stakeholders. This platform allows employers to download Form 16 To download Form 16 from TRACES, follow these steps:
- Step 1: Go to the official TRACES website.
- Step 2: If you are already registered, enter your PAN card number (User ID) and Password to log in. For new users, complete the registration process and create a new account.
- Step 3: Go to the ‘Downloads’ tab and select ‘Form 16.’
- Step 4: Select the Form type and select the financial year for which Form 16 is required.
- Step 5: Verify PAN and other details.
- Step 6: Enter the TDS receipt number and select the date of the TDS.
- Step 7: Mention the total tax deducted and collected.
- Step 8: Click on submit to request for download.
- Step 9: Download the files under the ‘Downloads’ tab once the Form is available for download.
Also read: Can NRIs file ITR 1 in India? Types of ITR forms for NRIs
What is the Due Date for Form 16?
Income tax laws require a TDS certificate to be issued within 15 days after the due date for filing the TDS return, which is May 31 for the fourth (final) quarter of a financial year. Form 16 includes the entire financial year, it can only be issued after the TDS return for the last quarter is filed. Therefore, companies must provide Form 16 to employees by June 15. An employer can issue Form 16 even before that but only after filing the TDS return for the fourth quarter.
Is Form 16 Mandatory for Filing ITR?
It is important and recommended to have Form 16 as it helps you at many important places like filling ITR but even without Form 16, an individual can file an ITR. You can use alternative methods like Form 26AS for this purpose too if you do not have Form 16 provided by your employer.
- Calculate Income From Salary: You need to use your salary slips to calculate the income from your salary. You can collect the slips from your employer, who will also provide a breakdown of your salary income. The details will include gross salary and the value of perquisites, professional tax, allowances exempted under Section 10, and entertainment allowance.
- Compare TDS Deducted With Form 26AS: Form 26AS contains details regarding the TDS amount deducted from all income sources, which includes the income from salary. You need to cross-check the TDS figures shown on 26AS and see if there are any discrepancies.
- Calculate Income From House Property: If you have any rental income from a house property you own, it is important to report as well. If you have taken a home loan and are paying interest on it, you will get a deduction of the same under the head.
- Calculate Income From Capital Gain And Other Sources: For the sale of equity or mutual funds, you need to pay a capital gain tax if the returns are more than ₹1 lakh and if it is held for more than one year. You need to calculate the income earned from other sources, like interest on bank deposits and interest on an income tax refund.
- Claim the Deductions: You can claim deductions under Sections 80C, 80D, and 80G, among others. Every deduction will have a specified limit.
- Calculate the Tax: You must now deduct the deductions from the total earnings to get the final taxable income. You can now estimate the income tax liability, pay tax, and file the ITR.
Also read: 5 Tips for NRIs Filing Income Tax Returns in India
Income Tax Slab Rates for AY 2024-25 (FY 2023-24) – New Tax Regime & Old Tax Regime
| Income Tax Slab | Old Regime Slab Rates for FY 23-24 (AY 24-25) |
|---|---|
| Up to Rs. 2.50 lakh | Nil |
| Rs. 2,50,000 -Rs. 5,00,000 | 5% |
| Above Rs. 5 lakh to Rs. 6 lakh | Rs. 12,500 + 20% |
| Above Rs. 6 lakh to Rs. 7.50 lakh | Rs. 12,500 + 20% |
| Rs. 7.50,000 to Rs. 9,00,000 | Rs. 12,500 + 20% |
| Rs. 9,00,000 to Rs. 10,00,000 | Rs. 12,500 + 20% |
| Rs. 10,00,000-Rs. 12,00,000 | Rs. 1,12,500 + 30% |
| Rs. 12,00,000-Rs. 12,50,000 | Rs. 1,12,500 + 30% |
| Rs. 12,50,000-Rs. 15,00,000 | Rs. 1,12,500 + 30% |
| Above Rs. 15,00,000 | Rs. 1,12,500 + 30% |
| Income Tax Slab | New Regime Slab Rates for FY 23-24 (AY 24-25) |
|---|---|
| Up to Rs. 3 lakh | Nil |
| Rs. 3,00,000 -Rs. 6,00,000 | 5% (Rebate u/s 87A available) |
| Rs. 6,00,001 lakh to Rs. 9,00,000 | 10% (Rebate u/s 87A available for taxable income up to 7 lacs) |
| Rs. 9,00,001 to Rs. 12,00,000 | 15% |
| Rs. 12,00,001 to Rs. 15,00,000 | 20% |
| Above Rs 15,00,000 | 30% |
Also read: NRI Income Tax Slab Rates for FY 2023-24 (AY 2024-25)
Wrapping up
Form 16 and Form 16A are important ways for tracking and reporting your income and taxes. They simplify the tax filing process, give accuracy, and serve as proof of tax payment. Understanding these forms and how to use them is important for every salaried individual in India who earns a salary of more than 2.5 lakh.
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FAQs
What is the use of Form 16 for salaried employees?
Form 16 makes filing your income tax returns easier. It shows that your employer submitted the TDS deducted from your salary to the tax authorities. It also explains how your tax was calculated based on the investments you declared at the start of the financial year.
What happens if Form 16 is not given by the employer?
If an employer doesn’t give you Form 16 after deducting TDS, they face a penalty of at least Rs 100 per day until they provide it.
What is the purpose of Form 16A?
Form 16A is a TDS certificate issued by employers when they deduct tax from sources other than salary. It accompanies Form 16, which specifically covers salary income. They are records of TDS paid by you.
Is TDS refundable?
If you’re in the 5% tax bracket, you can request a refund for any extra TDS deducted. Similarly, if more TDS was deducted from your salary because you didn’t submit proofs like 80C investments or rent receipts for house rent allowance to your employer, you can also claim a refund for that excess amount.
