Form 16 is one of the most common financial documents you would come across when filing your Income Tax Return (ITR).
It is a certificate of Tax Deducted at Source (TDS) and is issued by an employer to its employee under the Income Tax Act 1961. It details the salary breakup, allowances, and TDS deducted for a particular financial year. It also acts as proof that the employer has submitted the TDS deducted from your salary to the Income Tax Department. Therefore, it helps you claim the tax benefits while filing the Income Tax Return (ITR).
Every employer you work for is liable to issue a Form 16 to you. However, if your income is below the tax-exemption limit, no TDS should be deducted, and thus the Form 16 should not be issued. The Form 16 plays an integral part in your annual financial cycle, whether you are employed or a pensioner.
Why is Form 16 required for buying a car?
Form 16 is an extremely important document for the following reasons below:
- It is proof that the government has received the tax deducted by your employer.
- It is proof of salary income.
- It can help out during the process of filing your income tax return with the Income Tax department.
- Several banks and other financial institutions will demand Form 16 to verify the person’s credentials during the process of loan application.
How to get Form 16?
Form 16 is a mandatory document that your employer must issue if they have deducted tax from your salary. It provides information on TDS (Tax deducted at source) or TCS (Tax collection at source) for all the transactions between the deductor and deductee.
How to get Form 16 from your employer?
Employers are responsible for issuing Form 16 and they use the TRACES (TDS Reconciliation Analysis and Correction Enabling System) portal to generate your Form 16. The employer can provide Form 16 either as a soft copy or a hard copy from their account on the TRACES website. TRACES is managed by the Income Tax department and it is an online platform which is designed for TDS-related activities.
On this portal, payers and deductors can view the taxes paid online, reconcile any differences before filing returns and seek refunds if any. You cannot download your Form 16 from the TRACES portal as an employee. Only the employers can do so since they are the tax deductors at source.
How to Download Form 16 online?
Download Form 16 from the official Income Tax Department website by following these steps:
Step 1: Visit the official website of the Income Tax Department.
Step 2: Click on the ‘Forms/Download’ section in the menu bar.
Step 3: Select ‘Income Tax Forms’ from the drop-down menu.
Step 4: You will be redirected to a new page. Scroll down to find Form 16 under ‘Frequently Used Forms’.
Step 5: You will see download options for ‘PDF’ and ‘Fillable Form’ under ‘Form 16’.
Step 6: Click on the desired option and download the form.
When is Form 16 issued?
In a financial year, the Form 16 is typically issued by 15th June every year, so that you get enough time to file ITR before the last date. The financial year in India runs from April 1st to March 31st of the following year. So, for instance, if you are referring to the financial year 2022-23, it starts on April 1, 2022, and ends on March 31, 2023.
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Parts of Form 16
The Form 16 carries all the information that helps you to file your income tax return and it separates the information into 2 parts – 16 A and 16 B. Components of Form 16 – Part A and Part B are given below:
Part A
Part A of Form 16 states the details about the employer and employee:
- Name of the employee
- Address of the employee
- PAN of the employee
- Name of the employer or tax deductor
- Address of the employer or tax deductor
- PAN of the employer
- Address of the employer
It also mentions the amount of tax deducted, its date of deposition to the Income Tax Department, and details of the challan issued by the government.
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Part B
Part B of Form 16 contains the detailed breakdown of the evaluated tax according to the investment declaration you make at the start of the financial year and the proof of investment you submit afterwards. It also contains details of any extra allowances given by the employer to the employee that might get assessed for tax computation purposes. Other information such as house rent, medical bills, EMIs for home loans, and donations (that are not taxable) that you have mentioned to your employer also come under part B. Here is all what Part B covers:
- Gross salary
- Allowances exempted under Section 10
- Tax on employment
- Deductions under Section 80C – Provident Fund (EPF/PPF) Housing Loan, National Saving Certificate, Life Insurance Plans, tax saving Mutual Funds and other investments in tax saving schemes.
- Deductions under Sections 80E, 80G, 80TTA, that includes National Pension Scheme, Medical claims, Donations exempt under Section 80G, and others
- Tax on total income earned
- Any education cess, Swatch Bharat cess levied by the Government from time to time etc
- Any rebate on tax
- Any surcharges
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How to fill out Form 16?
As an employer, here are the steps involved if they have to download Form 16 through TRACES:
- Login to TRACES portal login page at tdscpc.gov.in/app/login.xhtml.
- Log in using the employer login ID and password and the TAN of the deductor.
- Head to the ‘Downloads’ Tab.
- Look for the ‘Form 16’ option.
- Fill in all the required employee details, such as their name, address, and PAN.
- You will need to fill out all the employee details as well.
- The generated Form 16 can then be downloaded and sent over to the employee.
What documents should be submitted along with the Form 16 to the RTO?
Some additional documents are required along with Form 16 to provide necessary evidence and information to the RTO. This helps them to ensure compliance with legal requirements and your application can be safely handled by the authorities. For successful submission, you need the following documents along with RTO Form 16:
- Address Proof
- PAN Card
- ID Proof
- Copy of Trade License
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Summary
This article covers all the necessary information regarding Form 16 and why it is an important document when it comes to filing IT returns every financial year or for any other purpose. It is quite a vital document as it is proof of salary income and it can aid during the time you file for an income tax return and other places such as VISA processing, credit cards, loans etc.
It can be acquired by your employer through the TRACES portal and it will be handed over to you to fill. Later, ensure that you submit it to the RTO with the other necessary documents. There are several long procedures involved when filling out Form 16 which is covered in detail in this article. Whether it involves buying a new or used car, Form 16 steps in and plays a vital role when you apply for a car loan.
FAQ
Q: What to do if the employer has deducted tax but Form 16 has not been issued?
A: As provided in the rules and regulations, any employer paying salary to its employee, is under an obligation to deduct TDS on the same and deposit the amount deducted, with the Government of India, within the prescribed time period.
If your employer has deducted the tax from your salaried income but has not deposited the tax, then you will have to pay the tax online or offline and later claim it from your employer. If your employer has deposited the deducted amount but has not issued Form 16 to you, you can visit the TRACES official website and download Form 26AS.Q: What is the procedure to get Form 16?
A: The employer will directly issue the receptive Form 16 to the employee and even in case an employee leaves their job, the employer will then also provide the Form 16. However, if your employer did not deduct any tax at source from your salary, considering your income for the year is below the tax-exemption limit, they may not issue Form 16.
Q: Does non issuance of Form 16 signify no obligation to pay tax?
A: As discussed above, even though a Form 16 is issued, where TDS is deducted on salary received, the responsibility of paying income tax and filing income tax return is upon the employee. Even when the employer fails to issue the Form 16, one must file an income tax and pay off the taxes that are due.
If the employer does not issue Form 16 within the stipulated time, the same is liable for penalty under Income tax act. The employee may raise a grievance to the Income tax department in this regard by contacting their local branch of Income office or through the Aaykar Sampark Kendra.Q: How can I get a duplicate copy of Form 16?
A: If you need a duplicate tax certificate, contact your employer who deducted the tax, or the authorised institution if you are no longer employed. Pensioners should contact the bank where they receive their pension.
Q: What are the components of salary income?
A: Generally, the amount of salary includes basic salary, dearness allowance, wages, other allowances, bonus, leave encashment, gratuity, pension and any prerequisite received by the employer from the employee, either without any payment or at a lower cost.
Q: What is the due date for issuance of Form 16 by the employer?
A: Every employer is required to issue Form 16 to their employees, on or before 15th June every year, immediately after the financial year in which TDS is deducted.
Q: What is the procedure when the original Form 16 is lost?
A: If the employee loses the possession of original Form 16, due to any reason, he may apply to their employer for issuance of a duplicate form 16. Also, the employee can download Form 26AS, to get the details of TDS deducted and deposited, for the particular assessment year.
