Income Tax Filing Using Form 16

What is Form 16?

If tax has been subtracted from the employee's salary income, the employer will issue a Form 16 as a TDS certificate. If tax has been taken out of the employee's salary income, the employer is required to provide Form 16. Both the two components of Form 16—have the TRACES logo and must be downloaded through the income tax portal and they come in two parts. | After the financial year has ended, an employer issues Form 16 to employees. The TDS certificate displays the data for the previous financial year. The deadline to submit Form 16 is June 15. Thus, information about the salary income received, taxes paid, and tax exemptions claimed in the FY 2021–22 will be included in Form 16 issued on or before this date.

Employers are normally to issue the Form 16 by mid-June every year for the recently completed taxation period, but in 2020, due to the Covid19 pandemic, the date was extended to 30 November 2020.

Components of Form 16

Form 16 consists of two components: Part A and Part B. Part A contains some necessary details about the employee and Part B holds the annexures in support of Part A.

Part A

Part A of Form 16 can be downloaded through TDSTraces.

Before a certificate is issued by an employer, it is always checked and authenticated. If you have worked for two organisations in one financial year, then both employers would be required to issue separate Forms 16.

Form 16 consists of:

• Name of the employer and employee
• Address of the employer and employee
• PAN of the employer and employee
• TAN of the employer
• Assessment year and duration of the employee worked in the organisation
• Unique TDS certificate number
• Summary of tax deducted and deposited quarterly.

These are certified by the employer and looks like this:

Part B

Part B of Form 16 is the annexure of Part A which contains these details:

• Break up of salary
• Taxable salary
• Salary deduction under Sec. 80C and Sec. 80U
• Details of income from house property
• Aggregate tax on income
• Other income declared by the employee to his employer
• Deduction under Chapter VI-A.of the Income Tax Act
• Relief under Sec. 89 of the Income Tax Act
• Tax deducted at source
• Net income tax payable.

Part B of Form 16 looks like this

Checklist for Form 16

• Personal Details: Check if your name, address, and PAN are correctly mentioned in Form 16
• Salary Details: Verify if the salary details, such as basic pay, allowances, and perquisites are accurately mentioned
• Tax Deducted at Source (TDS): Check if the TDS deducted by the employer is correctly mentioned in Form 16. Verify if the TDS amount matches with your Form 26AS
• Other Deductions: Verify if the other deductions such as EPF, PPF, or any other investments made by you are correctly reflected in Form 16
• Tax Computation: Check if the total income, deductions, and tax payable are accurately calculated as per the income tax laws
• Part B: Verify if Part B of Form 16 has been issued to you, which provides a summary of your salary, TDS, and other related information
• Acknowledgment Number: Check if the employer has mentioned the acknowledgment number of the TDS return filed with the tax department.

PAN:

The PAN is the most important information at the time of tax filing. Therefore, it is very important to ensure that the PAN mentioned in Form 16 is entered correctly. If you have worked for more than one organisation in one financial year, make sure you check it on each Form 16.

In case the number mentioned is wrong, it will reflect in Form 26AS. The tax deducted from your salary will not be reflected and you won’t be able to claim credit for that while filing your ITR.

Form 26AS is the passbook for taxes that have been deducted from your income and shows the record of TDS deducted by employers and deposited against your unique PAN. If you have paid any advance tax or deposited the self-assessed tax, everything is recorded in this form.

Also, the Income Tax Department will provide particulars for tax demands, refunds, all pending income tax returns online proceedings and proceedings that are resolved.

Part A of Form 16:

In Part A of Form 16, the details of both the employees and employer are mentioned, such as name, address, PAN, and the employer’s TAN etc.

It is necessary that the TDS details match the data recorded in Part A of Form 16 with the data in Form 26AS. In case of any dissimilarity, it should be immediately communicated to the employer. After rectifying the mistake, the employer will need to issue a revised TDS certificate.

Part B of Form 16:

Part B of Form 16 consists of the details of the income earned in the financial year. The income details to be furnished here are extensive. If you have worked under two employers in one financial year, ensure your Form 16 carries the information from the previous employer. If it is missing, get that included in Part B of Form 16. The tax-saving deductions and exemptions claimed have to be supported by relevant documents submitted by the employer.

Post the amendment of 2019, from the financial year 2019-20, a detailed break up of tax-saving deductions is to be shown. The tax-saving deductions and exemptions claimed have to be supported by relevant documents submitted by the employer.

Avoiding Any Dissimilarities

When you are filing your ITR, it is important that you verify and match the information available in Form 16 with the details mentioned in Form 26AS and salary slips. If there are any dissimilarities, immediately bring that to the notice of your employer.

When You Have More Than One Form 16

You should have more than one Form 16 for that financial year if you worked for two different employers during that time period, or if you changed jobs. In this instance, all sets of Form 16 must be taken into account while computing.

• Step 1: Collect all of the wages you received from all of your employers over a financial year.
• Step 2: Deduct the amounts that are excluded from allowances and perks. Keep all supporting documentation close at hand in order to request HRA exemptions because you might not qualify if you don't present the employer with a rent receipt.
• Step 3: Claim all of the deductions permitted by Sections 80C, 80D, and 80G
• Step 4: Determine your tax responsibilities and deduct the TDS. Form 26AS can be used to cross-check the TDS amounts.

There are times when the previous employer fails to provide Form 16. In that case, the issued payslips can be used to determine the tax obligation.

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