FORM NO.16

Form 16 is a “certificate issued under section 203 of the Income Tax Act, 1961” for tax deducted at source (TDS) from salary income earned during the financial year.

Form 16 is essentially a certificate issued by the employer to its employees.? On behalf of employees, it verifies that TDS was deducted from the salary and deposited with the government authorities.?It provides a summary of the salary paid to the employee and the amount deducted as TDS.

It has all details needed to prepare and file the “Income Tax Return” ITR! In Form 16 the deductions by the employer are shown separately from the salary.?

Form 16 is divided into two parts: PART A and PART B!

PART A of Form 16:

In Part A of Form 16, employers' PAN and TAN are deducted and deposited quarterly for TDS. The TRACES portal allows employers to generate and download this part of Form 16. It is the employer's responsibility to authenticate the contents of the certificate before it is issued.

PART B of Form 16:

An annexure of Part A constitutes Part B of Form 16. A detailed breakdown of the salary and deductions approved under Chapter VI-A is included in Part B, which must be prepared by the employer for its employees.

Eligibility criteria for Form 16:

According to regulations provided by the “Finance Ministry” of the Indian Government, Form 16 applies to salaried employees whose income falls under the taxable bracket.

If an employee's income does not come under the taxable bracket, there is no need to have Tax Deducted at Source (TDS). In the above case, the company is not obliged to provide Form 16 to their employees.??

During a financial year, did you work for more than one employer?

In the case where you have only worked for one employer for the full financial year, Form 16 will be issued by that employer.

The employee needs Form 16 for each job period if an employee worked for more than one employer during the financial year.

Moreover, if an employer delays or fails to issue Form 16 by the specified date, then they are liable to pay a penalty of rupees 100 per day until the default ceases. The penalty amount, however, should not exceed the tax deducted.

Benefits of Form 16:

• It will act as proof of tax payment and income.
• This document contains all the details of your salary's TDS deductions.
• You can submit it as proof of income tax when applying for the loan.