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 usually 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
Only the TDS Deducted from Salary is reflected in this form and TDS Deductions from any other Income are reflected in Form 16A
Components of Form 16
This TDS Certificate is a detailed form contains particulars like:-
- Name, PAN Card No. of the Employee
- Name, PAN No. & TAN No. of the Employer
- Acknowledgement No. of the TDS Payment deposited with Govt.
- Detailed Salary particulars like House Rent Allowance, Leave Travel Allowance, Leave Encashment, Gratuity, Pension, Deductions 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