With the deadline approaching to file the income tax returns, doubts arise in the minds of the people who are facing these procedures for the first time. If you are a salaried professional, then the Form 16 for form an important component of the income tax returns that you file for the financial year. For people who are new to this concept, the Form 16 is nothing but the salary certificate that an employer will issue the employee and would information about the salary paid and taxes deducted for that particular person.
What does the Form 16 have?
This is the legal document under Section 203 according to IT Act of 1961. The Form 16 will be provided to the employees from the employers and will have all the details about the TDS that has been deducted from the employee’s salary. This legal document has to be filed along with the IT returns documents. Filling up the Form 16 is not a difficult task and does not require the help from Chartered Accountants or tax advisors, unlike other IT documents.
The Form 16 would be presented to the employee one year before the tax returns are to be filed. For instance, if you are supposed to file the taxes by March 31st of the present year, then the Form 16 must be issued by May 31st of the previous year. With this being the case, the form has two components, Part A and Part B, which needs to be duly filed as a whole by the tax payer.
- Components of Form 16-Part A
Part A of Form 16 will have the details about the TDS and the total amount that has been paid as salary to the taxpayer. The components of the Part A form include,
- PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number) details of the employer
- PAN details of the employee/Taxpayer
- Name, address and other details of the taxpayer and the employer
- Details about the current financial assessment year
- TDS deducted by the employer
- Components of Form 16-Part B
Part B is considered to be the annexure of Part A and has the consolidated details about the salary paid to the employee. The components include,
- TDS amount by employee
- Due payable or tax refund details
- Section 80C aggregate with deductible and gross amount
- Taxable salary of the employee/taxpayer
The need for Form 16
One needs to understand that Form 16 is given to the employees who come within the tax bracket as mentioned by the Finance Ministry of Government of Indian and for those who have been excluded from the bracket would not be given the form. For those who have been issued with this form, you need to understand that this single document is of utmost importance and it forms the base for your income tax returns for the financial year. As the complete details about the salary components and TDS are mentioned, this document will serve as proof for the tax money that you would be paying income tax.
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