Form 16 is a TDS Certificate issued by the employer deducting the TDS while making payment to an employee. As per the Income Tax Act, every employer at the time of payment of Salaries shall deduct TDS at the average rate of income tax computed on the basis of the Income Tax Slab Rates in force for that financial year in which the payment is made on the estimated income of the assessee.
- Recommended Read: Latest Income Tax Slab Rates
The TDS so deducted by the employer is to be deposited with the Income Tax department and after depositing the same, the employer issues a TDS Certificate containing all particulars of the tax so deducted and deposited in Form 16. It is issued by the employer after the end of the year. As per the Income Tax (Sixth Amendment Rules), the last date for issuance of Form 16 by an employer to his employee is 31st May of the next year.
- Recommended Read: Computation of TDS on Salary
Components of Form 16
Form 16 is a very simple and easy to understand form which states the Salary (and its related components) paid by an employer to his employee and the income tax deducted thereon.
On the basis of Form 16, a taxpayer can easily file his income tax return form without the help of a Chartered Accountant. There are various income tax return forms for different category of income earners. For taxpayers earning income from Salary and/or House Property and/or Capital Gains and/or Other Sources, they can file ITR 1/ ITR 2
Form 16 is divided into 2 parts: Part A & Part B.
Part A of Form 16
Part A of this type of TDS Certificate consists of details like:-
- Name, PAN Card No. & Address of the Employee
- Name, PAN No., Address & TAN No. of the Employer
- The Assessment Year for which the TDS has been deducted.
- Summary of Salary paid and the TDS deducted and deposited with the govt.
- Acknowledgement No. of the TDS Payment deposited with Govt.
Part B of Form 16
Part B of this type of TDS Certificate consists of details like:-
- Detailed Salary particulars like House Rent Allowance, Leave Travel Allowance, Leave Encashment, Gratuity, Pension, Deductions claimed like PPF, Tax Saving FD, National Saving Certificate etc
- The Total Income and the Total Tax on Salaries thereon
- Education Cess and Surcharge if any
- Tax Deducted under section 192(1A)
- Balance Tax payable/tax refundable
This TDS Certificate also contains a declaration at the end that the person deducting the tax has deposited the same with the Central Govt. This statement may either be manually signed or digitally signed. An extract of a specimen copy of Form 16 is shown below:-
Form 16 in case of Job Change
In case you have changed your job during the year, you are required to collect this form from both the previous employer as well as the new employer as you would be filing your Income Tax Returns on the basis of your Form 16.
When you join any new organisation, you should furnish your TDS details from the previous employer to the new employer. You would also be required to furnish Form 12B to the new employer
Furnishing the TDS Details issued by the previous employer would help the current employer in deducting the tax accordingly. Although furnishing these details is not mandatory, if you do not mention these details to your current employer, then you are liable to yourself compute the total income from both the employers and calculate your tax liability accordingly. (Only applicable in the year of job change)
Benefits of Form 16
- This TDS Certificate contains all particulars and details of the TDS deducted and deposited. Although a copy of this TDS Certificate is not required to be furnished at the time of filing of Income Tax Return, the details mentioned in Form 16 are required to be furnished in the Income Tax Return.
- This TDS Certificate is the most powerful proof of the Income of an Individual and the fact that the tax has been paid thereon. Banks heavily rely on this TDS Certificate to assess the Income of an Individual at the time of Home Loan application and require any Home Loan applicant to furnish his Form 16
Online Verification of Particulars of Form 16
For the benefit of the Tax Payers, a new facility has been launched from Financial Year 2011-12 onwards through which a taxpayer can verify that the details mentioned in his Form 16 are true by logging on to Tax Information Network of the Income Tax Department at
This facility is available from the financial year 2011-12 onwards and you would be required to furnish the TAN No. of the employer, PAN No. of the Employee, Certificate Number & the Total Amount Deducted. The details of Form 16 can also be verified from Income Tax Form 26AS which can be downloaded online
Other Relevant Points regarding Form 16
- If you have not furnished details of deductions claimed by you under Section 80C, Section 80D, Section 80E, Section 24 etc., the TDS deducted may be higher than justified as you didn’t furnish these details to your employer. However, you can still claim these deductions and claim refund of the excess TDS deducted at the time of filing of your income tax return.
- If any Professional Tax has been levied, this would be allowed as a deduction at the time of computation of Income Tax and would be accordingly reflected in Form 16.
- This Form is not required to be attached with the Income Tax Return but the Income Tax Officer may ask for it at a later stage.