Form 16

What is Form-16?

Form 16 is a certificate that outlines the TDS and the salary earned by the employee during the financial year. It is issued to file income tax returns and reconcile tax liability with the TDS by the employer. Form-16 is issued by the employer to salaried employees at the start of the financial year. This form summarizes the income earned and the financial deductions made. The TDS certificate acts as proof of income and helps file income tax returns and apply for loan or visa.

Who is eligible for Form-16?

Any salaried employee who has received a salary during a financial year is eligible for Form 16. It includes people from both government and private sectors. Anyone who earns income from other irregular sources, such as self-employed individuals and freelancers, are not eligible to receive Form 16. It is not applicable to individuals who are not salaried employees or have no TDS deductions. This form is issued when the employer deducts TDS from the salary and deposits it with the Income Tax Department.

When will Form 16 be available for FY 2023-24?

Form 16 is issued before the deadline for income tax filing, which is 31st July 2024. For the financial year 2023-24, Form 16 will be available by 15th June 2024. Employees can only file their income tax once the financial year ends (1st April 2023 to 31st March 2024) as it summarizes the income earned throughout the year along with the TDS by the employer.

How can I get Form 16?

Form 16 can be downloaded depending on the employer’s procedures and systems. Employees can get Form 16, both via online and offline sources.

1) Online sources

Some of the online sources to get Form 16 are:

  • ESS Portal

Many companies provide an Employee Self-Service portal where employees can access various HR-related documents, including Form 16. Depending on the HRMS (HR Management System), employees can download it from the portal.

  • Email

Form 16 can also be sent by the employer via email with password protection. Employees can download it using the password provided by the employer.

  • Payroll software

If the employee has access to the payroll system, he can log in and download Form 16 for the financial year.

  • Company website

A few companies make Form 16 available for download on their website. Employees can download it using credentials.

  • Income Tax Department’s website

TRACES is the Income Tax Department’s website where employers can download Form 16. They need to log in to download the form. It’s important to note that employees cannot download Form 16 from TRACES as it requires information that is available only to the employer.

2) Offline sources

When employers don’t have a system in place, they prefer offline methods to issue Form 16. Employees can get their Form 16 through the following ways:

  • HR Department

Employees can reach out to their HR department as they usually issue Form 16 before the due date.

  • Physical

Employers may provide a physical copy of the form or may send it via mail.

Download Form 16 from TRACES

TRACES (TDS Reconciliation Analysis and Correction Enabling System) is an online website by the Income Tax Department of India. It is used to manage TDS-related activities and provides services to employers, taxpayers, and other stakeholders. This platform allows employers to download Form 16 and Form 16A as well. To download Form 16 from TRACES, follow these steps:

Step 1: Visit the official TRACES website.

Step 2: Enter PAN card number (User ID) and Password to login, if already registered. For new users, complete the registration process and create a new account.

Step 3: Navigate to the ‘Downloads’ tab and select ‘Form 16.’

Step 4: Choose the Form type and select the financial year for which Form 16 is required.

Step 5: Verify PAN and other details.

Step 6: Enter the TDS receipt number and select the date of TDS.

Step 7: Add the total tax deducted and collected.

Step 8: Click on submit to request for download.

Step 9: Download the files under the ‘Downloads’ tab once the Form is available for download.

Can you use TRACES to get Form 16 from your employers?

Employees cannot use TRACES to get Form 16. They do not have information of the TDS receipt number and the total tax deducted. They can, however, get it from their employers directly.

What are the types of Form 16?

Form 16 is a TDS certificate issued under the Income Tax Act, India. It is issued by employers to their employees, and it provides a summary of the income earned and the deductions made for a specific financial year. There are different types of Form 16, which are as follows:

Form 16A

Form 16A is maintained by the Income Tax Department of India. This can be downloaded from TRACES. It contains details of the TDS from salary in every quarter. It has the following components:

  • Employee’s name and address
  • Employee’s PAN (Permanent Account Number)
  • Period of employment during the financial year
  • Assessment year
  • Various salary components, such as
    • Basic salary
    • Allowances
    • Perquisites
    • Incentives/perks
    • Gross and net salary
  • Summary of TDS deducted
  • Employer’s name and address
  • Employer’s PAN
  • Employer’s TAN (Tax Deduction and Collection Account Number)
  • Challan Identification Number (CIN)
  • Verification certificate for information credibility

Form 16B

Form 16B is prepared by the employer and contains a detailed breakup of the employee’s salary, deductions, and other relevant information. This Form summarizes the total income and tax for a specific financial year. It contains:

  • Detailed salary breakup
    • HRA
    • Bonus/incentives
    • Any other benefits
    • Basic salary
  • Exemptions and allowances
  • Deductions under Section 80C
    • Contributions to eligible expenses and investments (PF, PPF, life insurance premiums, etc.)
  • Other deductions
    • Section 80D (health insurance premium)
    • Section 80G (donations)
    • Section 80E (education loan interest)
  • Gross total income
  • Rebate and surcharge
  • Educational cess details
  • Tax Deducted at Source (TDS)
  • Net tax payable
  • Tax deducted and deposited from the employee’s salary
  • Verification certificate

What is the difference between Form 16A and Form 16B?

Form 16A and Form 16B are both documents related to TDS but are issued for different types of income sources. Form 16A is a TDS certificate issued to individuals who earn income from sources other than monthly salary, like rent or interests. On the other hand, Form 16B is for sale of property and is issued by the buyer to the seller. The buyer shows the amount of tax deducted from the sale. Both the certificates show how much tax was deducted and deposited with the government.

While Form 16A is issued to individuals who earn income via rent and return on investments, Form 16B is issued at the time of sale of property. Both represent different sources of income.

How to file Income Tax using Form 16?

Firstly, collect Form 16 from the employer. To file income tax returns, visit the Income tax e-filing portal and login. Enter all required details and submit ITR for verification. It is mandatory to file ITR every year. When the salaried employee receives Form 16, he is responsible for checking all details in the document. Any errors in Form 16 should be rectified before filing ITR.

Can filing of income tax returns be done without Form 16?

Income tax returns can be done without Form 16. The salaried employee should compute his gross salary via pay slips. However, this is a complicated process.

Is Form 16 and ITR the same?

Form 16 and ITR are not the same. Form 16 is a document issued to salaried employees to file ITR. On the other hand, ITR is a set of forms used to calculate tax liability and file income tax returns with the Income Tax Department.

Is Form 16 mandatory?

Form 16 is mandatory for all salaried employees who have TDS deductions. This Form acts as proof of the income earned during a financial year. It is also mandatory for new employees to be issued a Form 16 from their employer.

Can we share Form 16 with anyone?

Form 16 is a confidential document that should not be shared. This Form contains sensitive information and sharing it with unauthorized people may lead to legal disputes, misuse, or privacy issues.

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