Everything You Wanted to Know About Form 16

It’s that time of the year again, when you receive details of salary paid to you during the previous financial year and the tax deducted on it. May 31 is the last date for your employer to issue a Form 16 and most of you might have already received one. It is important to understand what makes Form 16 a crucial document. You can upload your Form 16 on tax filing portal ClearTax and if salary is your only source of income, you can complete your return in a matter of few minutes. Let’s understand about Form 16 in detail.

What is Form 16 all about?

Form 16 is the TDS certificate that an employer issues to you when TDS is deducted by them. When an employer deducts TDS on salaries, the income tax act requires that a certificate must be issued by the employer, where the details of tax deducted and deposited is certified.

Your Form 16 has 2 parts – Part A and Part B.

Part A has TAN (tax deduction & collection account number) of the employer & PAN (permanent account number) details of both the employer and employee. The name and address of employer and employee is also mentioned. It also mentions the assessment year and the period spent by you with the employer. Note that for financial year 2014-15 the assessment year is 2015-16. Part A also has summary of tax deducted from your income and deposited to the government as per the quarterly TDS return filed by the employer. A monthly detail of TDS deducted and deposited is also certified.

Part B is an important part of your Form 16 since it has a consolidated detail of salary paid to you during the year. The breakup of your salary as well as detail of deduction claimed by you under section 80 of the income tax act is mentioned. Deductions under Chapter VIA include details of amounts claimed under Section 80C for EPF, PPF, NSC, life insurance premium or Section 80D for health insurance, Section 80G for donations made are all mentioned here. It also shows your total taxable income and tax deducted on such income.

If you have been employed under more than one employer during the year, each of your employers will provide you a Form 16.

Is it mandatory for the employer to issue you a Form 16?

TDS certificate in Form 16 is only required to be issued to the employee when TDS has been deducted. In case no TDS has been deducted by the employer they may not issue you a Form 16.

When the employer deducts TDS and does not issue a certificate

Any person responsible for paying salaries is required to deduct tax at source on the amount payable. The act lays down that every person who deducts TDS from a payment must furnish to the recipient a certificate with details of tax deducted. An employer is compulsorily required to furnish you a certificate, in the format of Form 16, specifying that tax has been paid to the Central Government, with the amount so paid and other prescribed particulars.

An employer may be liable to pay a penalty for non-issuance of Form 16 where TDS was deducted.

If Form 16 has not been issued to me, does it mean I don’t have to pay tax or file a return?

While the onus of deducting tax on salaries and providing a certificate of TDS is on the employer – the onus of paying Income Taxes and Filing of Returns is on the employee. If your income under all heads, including salaries, is above the minimum taxable income (Rs 2,50,000 for financial year 2014-15) you are required to pay tax and file your income tax return. Prepare and submit your return even though your employer did not deduct any tax or where he fails to issue you a Form 16. In case you changed jobs during the year, do remember to include income from all your employers, whether or not a Form 16 was issued.

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