Form 16

What is Form 16?

Form 16 is an Income Tax form used by companies to provide their
salaried individuals in India. This form carries all the required details that
help the employee in filing their tax returns with the Income Tax
department in India. The Income Tax Act of 1961 and the Income Tax rules
of 1962 are the laws that are prevailing in India. When a Form 16 is
provided to an employee by their employer its a source of proof of filing
their Income Tax returns, the form has various components such as Salary
Income components of the employee. Every employer should provide their
employees with the Form 16 who fall under the tax brackets set up the
Finance Ministry of the Government of India. If an employee doesnt fall
under the tax brackets set, then he/she doesnt receive the Form 16 as
he/she will not need to pay taxes neither will they need to have Tax
Deducted at source or TDS.
These components are:

The personal details of the employee, like name, Permanent Account Number (PAN) etc.
The employer details, name, PAN, Tax deduction and collection Account Number (TAN),
etc.
An acknowledgement number of the taxes paid by the employer.
Details of the salary; Gross salary, net salary, deductions, perks etc.
Total income and tax deductions.
Education cess and surcharge details.
Taxes deducted as per sections 191A.
Declaration of tax payments from the employer.
Refunds in any to the employee, or balance of taxes payable by the employee.
Receipt of the TDS paid.
All details of the tax payment, like Challan number, cheque number, Demand Draft
number etc.

The Form 16 has 2 parts, Part A and Part B:

The Part A of the Form 16 contains the TAN of the employer and PAN of the employer and the
employee. The addresses of both the employee and employer. This will contains all details of the
pay-outs from the employer and employee during the current financial assessment year. This part
of the Form 16 also contains the TDS filed by the employer, the taxes deducted from your income
and paid to the government every quarter. This also contains a monthly statement of the same.
The Part A of the Form must include:

TDS deducted by the employer.

PAN of the employer.
The current financial assessment year.

The employee PAN.

TAN of the employer.
The employee/tax payer's name, address etc.
Name and address of the employer.
The Part B of the Form 16 contains the consolidated details of the salaries paid to the employee
during the financial assessment year. The salary must be broken down, with details of deductions
made by the employee under section 80C. The deductions that can be made under this section is
EPF, NSC, Life insurance premiums, PPF, etc. If in one financial assessment year employee has
changed jobs then the employee needs to be provided Form 16 of both companies.
The Part B of the Form must include:

Taxable salary of the employee.

TDS by the employer.
Breakup of the deductions of sections 80C.
Aggregate of the section 80C with gross and deductible amount.
Tax refund or any payables due.

How to Fill the Form 16?

Filling out of the Form 16 as shown below:
The Part A of the form will be

Name and address of the Employer: Will be the employer details.

Name and designation of the Employee: Will be the employee details as per company
records.
PAN of the deductor: Permanent Account Number of the Employer.
TAN of the deductor: Tax deduction and collection Account Number of the Employer.
PAN of the employee: employees Permanent Account Number.
CIT (TDS): This is the Income Tax Commissioners office details.
Assessment year and period: Is the current financial year and financial year beginning 1st
April and ending 31st March.

Summary of the quarters mentioned the company.

The Part B of the form will be as below:

Under this section:

Gross salary will be your salary without any deductions plus any prerequisites that you
receive.
Allowance that the company pays you, like travel allowance, house rent allowance etc.
The total income chargeable under salaries.
Gross total income will be the amount on which your taxes will be calculated.

Under this section you will have all the investments made by you and would have received the tax
benefits for the same.

How to Get the Form 16?

This document is generally issued by your employer, and is more commonly known as a salary
certificate to the common man. This is issued for the present financial year and reflects the total
earnings and total income taxes deducted for that financial year. For a salaried individual this
document is very important to show his/her income tax returns. To get the Form 16, you could
download the Form from the online website of the Income Tax Department. The form is available
on their website in a PDF format and a fillable form as well.

When is Form 16 Required?

When you file your Income Tax returns for a year with the Income Tax department, and your
employer also files the taxes on your behalf which are deducted at source (TDS), the Form 16 is
required. Most banks and financial institutions use this document as a part of their verification
process when you apply for a loan or any kind, be it a housing loan, consumer loan, vehicle loan,
personal loan etc.