Form 16 Issuance to Employees
Form 16 gives a detailed summary of the salary paid to the employees and the deducted TDS. TDS Form 16 contains all the information that an individual needs to prepare and file the income tax return.Form 16 is a certificate that employers issue to their employees. It is a validation that the TDS has been deducted and deposited with the government authorities on behalf of the employee of the organization. Form 16 gives a detailed summary of the salary paid to the employees and the deducted TDS. TDS Form 16 contains all the information that an individual needs to prepare and file the income tax return. The employers are required to issue a salary TDS certificate every year on or before the 15th of June of the coming year, immediately after the financial year in which the tax is deducted. There are two components to Form 16: Part A and Part B. If an individual loses Form 16, he can request a duplicate from the employer.
Structure of Form 16
Part A of Form 16 :
It provides the details of the TDS that is deducted and deposited. This form can be generated by the employer through the TRACES portal.
The employer must verify the contents before issuing the certificate. Here are a few components of Part A of the salary TDS certificate.
Name and address of the employer
Employer's TAN and PAN
PAN of the employee
summary of tax deducted and deposited quarterly, which is certified by the employer.
Part B of Form 16 :
It is an annexure to Part A. Part B is prepared by the employer for its employees, and it contains details of the breakdown of the salary deductions approved under Chapter VI-A. In the event of a job change within one financial year, Form 16 should be obtained by both employers. Some of the components of Part B are:
Salary breakdown in detail
Detailed breakup of exempted allowances under Section 10
Deductions that are allowed under the Income Tax Act (under Chapter VIA)
Here is the list of deductions:
Deduction for life insurance premium paid, contribution to PPF, etc. under Section 80C
Deduction for contributions to pension funds under Section 80CC
Deduction for an employee's contribution to a pension scheme under Section 80CCD(1)
A deduction is allowed for the taxpayer's self-contribution to a notified pension scheme under Section 80CCD(1B).
Deduction for the employer's contribution to a pension scheme under Section 80CCD(2)
Deduction for health insurance premiums paid under Section 80D
Deduction for interest paid on loans taken for higher education under Section 80E
Deduction for donations made under Section 80G
Deduction for interest income on a savings account under Section 80TTA
Wage Tax Withheld :
TDS is calculated based on the income tax rates that are prescribed for the financial year in which the employee's payment is made. An individual responsible for paying the taxes can increase or decrease the amount that is deducted based on any adjustments made to the previous deficiency or excess deduction.
Issuance of Form 16 to Employees :
After the TDS returns are filed by the employer, the government will issue TDS certificates to the employer, which in turn are provided to the employees.
Form 16A provides details about TDS from salary. Form 16B provides details of the TDS. Other than salary, Form 16C for TDS under Section 194-IB, Form 16A for TDS from other than salary, and Form 27D for TCS
The due date for the issuance of Form 16 is on or before June 15th of the financial year immediately following the financial year in which the tax is deducted. In the case of Form 16A, the same should be issued every quarter.