What are the contents of Form 16 and what do they reflect?

It is the tax paying season again. But this time, we ensure that you as an employee are aware about the Form 16 and how it affects you.

 

Starting off, let us understand what exactly is Form 16 and how it aids you as a salaried employee. Form 16 is an income tax form used by companies to provide their salaried employees the information about the tax deducted. It can also be considered as the TDS certificate. When Form 16 is provided to an employee by their employer, it is considered as a source of proof of filing their Income Tax Returns. And if your income does not fit the basic exemption limit which is Rs. 2,50,000, the employer does not deduct any TDS in that case.

 

Component of Form 16

 

• Refunds in any to the employee, or balance of taxes payable by the employee.
• Details of the employer like collection Account Number (TAN), name, PAN, Tax deduction etc.
• All details of the Tax Payment, like amount, Challan number, cheque number, Demand Draft number etc.
• Personal details of the employee, like name, Permanent Account Number (PAN) etc.
• Acknowledgement of the number of the taxes paid by the employer.
• Taxes deducted as per sections 191A.
• Total income and tax deductions.
• Details like salary, net salary, Gross salary, perks, deductions, etc.
• TDS receipt paid.
• Declaration of tax payments from the employer.

 

Form 16A

 

Also known as part A of Form 16, Form 16A can be generated and downloaded from the TRACES (TDS Reconciliation Analysis and Correction Enabling System) Portal. Before issuing this certificate, the employer must ensure the authenticity and correctness of the it’s contents. It is vital for you to get a separate Part A of Form 16 for the period of employment if you have changed your job. Following are the components of Part A of Form 16:

 

• PAN details of the employee.
• PAN & TAN of the employer.
• Employer Name and address.
• Summary of tax deposited and deducted quarterly, certified by the employer.

 

Form 16B

 

Form 16B is an annexure to Part A. In case you happen to change your job in one financial year, you will have to decide if you need Part B of the form from the last employer or from both the employers. Following are the components of part B of Form 16:

 

• Relief under section 89 (recalculating tax for the year in which arrears are received and the year to which the arrears pertain; and the taxes are adjusted in the year in which they were due)
• Detailed breakup of salary.
• Deductions that are allowed under the income tax act (under chapter VIA)

 

Required Details for Form 16

 

• Tax Payable or Refund Due
• Taxable Salary
• Aggregate of Section 80C Deductions (Gross & Deductible Amount)
• Breakup of Section 80C Deductions
• TDS (Tax Deducted at Source)

 

In conclusion, The Form 16 acts as a proof of tax payment for the employee and also provides the employee a much better view and breakdown of their salary and taxes deducted. Where organisations struggle to generate and disburse such forms if they even issue them in the first place, Spine HR Suite helps the employer automate the issuing of Form 16 and help enhance many other HR and Payroll Processes! You can learn more about Spine HR Suite here!