All You Need To Know About Form 16 & its Componentsby Sophie Grace What New When You Have Forgot to File Tax Return?
If you are a salaried employee you must have heard of Form 16. Form 16 is a basic document issued by an employer to the employee which is used for filing ITR every year. Filing one's ITR without Form 16 is almost impossible for most salaried individuals. Consequently, it is the confirmation statement by the employer about tax deducted at source has been accounted for from your salary & deposited with income tax authorities. Although, May 31 is the last date for your employer to issue a Form 16 and most of you might have already received one.
Moreover, your employer is entitled to issue Form 16 annually, on or before 15th June of the Assessment Year in which your TDS was deducted. When you prepare for ITR Filing, you should have a brief understanding of Form 16. This form comprises of two components - part A and Part B. These forms are significant and required to help you when you e-file income tax return.
Here's a brief discussion about Form 16 and its components-
It is important to understand any individuals who are getting a salary for the financial year more than the basic exemption limit of Rs 250000 and whose tax has been deducted by the employer at source is eligible to get Form 16. If you have also disclosed your income from other heads to your employer, he will consider your total income for TDS deduction.
Who is eligible for Form 16?
As per the income tax act, every employer who is paying salaries is required to deduct tax or TDS which further commute on the basis of the income tax slabs rates for the relevant financial year. Usually, most of the companies calculate the tax liability of the employee on the basis of the forecasted earnings and other investments declarations provided by the employees in previous year.
What is Part A of Form 16?
Part A of Form 16 comprises the details of Tax Deduction and account number of the employer and PAN details of both the employees and employer respectively. Along with this, the employer and the employees need to mention their address and the duration spent by the employees with the employer. These facts help the Income Tax Department to track the flow of money from the account of employer & employee. Fundamentally, the Part A also includes a summary of tax deducted from your income earned & deposited it with the income tax department as per the quarterly TDS return filed by the employer.
What is Part B of Form 16?
Part B is the consolidated statement of salary paid to you by the employer during the financial year. It covers details regarding your gross salary, Allowances exempt u/s 10, Tax on employment, Deductions u/s 80C, which include (the list is not comprehensive) details like Provident Fund (EPF/PPF) Housing Loan, LIC, tax saving mutual funds (ELSS), Tax on total income and any other investments.
Different Types of Form 16-
Form 16 consists of two components i.e. Part A and Part B. Let’s discuss it-
Ø Issued for tax deducted at source on salary
Ø Issued by employer
Ø Issued for tax deducted at source on any income outside your salary, such as rent, interest earned on investments
Ø Issued by financial institutions, tenant, and other entities
Ø Issued for tax deducted at source on income from the sale of immovable property
Ø Issued by the buyer of the property to the seller
Created on May 22nd 2019 05:26. Viewed 261 times.