What is Form 16?

Form 16 is a certificate issued to salaried individuals from their employer when he deducts tax from the employee salary. In simple words, it is an acknowledgement that states your income from that particular employer which has been accrued during last Financial year and Tax deducted upon it (if any).
Form 16 is an important document that is issued in accordance with the provisions of the Income Tax Act,1961. Form 16 contains details of the amount of tax deducted at source (TDS) on salary by your employer along with the salary breakup for the financial year. In a nutshell, it could be said that Form 16 is a certificate of proof of the TDS deducted & deposited by your employer.

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Why Form 16 is required?

Form 16 is a very important document as it:

• Serves as proof that the government has received the tax deducted by your employer.
• Assists in the process of filing your income tax return with the Income Tax Department.
• Many banks and financial institutions demand Form 16 for verification of the person’s credentials while applying for loans.

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Who issues Form 16?

Income Tax Law mandates the employer who holds TAN no and deducts tax on the salary of an employee to issue Form 16. So, If your tax is not being deducted then your employer can refuse to issue Form 16 to you.

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Time limit in which Form 16 is to be issued?

It must be issued by 15th June of the year for which it is being issued. For example, for the F.Y. 2021-22. the due date for the issue of Form 16 was 15th June 2022. If any employer delays or fails to issue Form 16 by the specified date, then he is liable to pay a penalty of Rs.100 per day till the date the default continues.

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Learn How to Fill Form 16? Details Required to Fill Form 16 While Filing Your Return

Understanding & learning how to fill form 16 is very simple. It is divided into two sections- Part A and Part B.

Part A of Form 16:

This part of income tax form 16 covers employer, employee, TDS payment details. It shows quarter-wise details of your tax deposited with the government. Some of the details are:

1. Name and Address of the employer.
2. PAN and TAN of the employer.
3. Name and Address of the employee
4. PAN of the employee
5. Statement of taxes paid by the employer

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Part B of Form 16:

This part shows the detailed computation of Income, on the basis of which tax is being calculated and deducted by your employer. It contains the breakup of the salary earned by you, various deductions, exemptions (if any) and the tax computation after considering all the items on the basis of applicable tax slab rates. The details mentioned in Part B are as follows:

- Wheather opting for Taxation under section 115BAC: Yes or No
(for better understanding of 115BAC, please refer to our guide on 115BAC or click here)

A. Gross Salary(1): This part of Form 16 requires details of salary as per provisions of section 17(1), perquisites and any profits received in lieu of salary u/s 17(2)&17(3) respectively.

B. Exemptions and allowances considered(2): Earlier in this part of form, combined information of all the exemptions under Section 10 was required, but with the introduction of new Form 16, a list of allowances is provided, and the details are required to be filled. The list of allowances are as follows:

• Travel concession or assistance under section 10(5)
• Death-cum-retirement gratuity under section 10(10)
• Commuted value of pension under section 10(10A)
• Cash equivalent of leave salary encashment under section 10(10AA)
• House rent allowance under section 10(13A)
• Amount of any other exemption under section 10

  (Note:- Breakup of this will be prepared by employer and will be provided to employee before furnishing part B of form 16, it may includes the following:-
  -Remuneration received as an official, by whatever name called, of an embassy, high commission etc under section 10(6)
  - Allowances or perquisites paid or allowed as such outside India by the government to a citizen of India for rendering service outside India under section 10(7).
  - Compensation limit notified by CG in official gazette as per 1st proviso of section 10(10B)
  - Compensation under schemes approved by CG as per proviso of section 10(10B)
  - Amount received/ receivable on VRS or termination of service under section 10(10C)
  - Tax paid by the employer on Non Monetary perquisites under section 10(10CC)
  - Prescribed Allowances or benefits (not in nature of perquisites) specifically granted to meet expenses wholly, necessarily and exclusively and to the extent actually incurred, in performance of duties of office or employment under section 10(14)(i)
  - Prescribed Allowances or benefits (not in nature of perquisites) specifically granted to meet personal expenses in the performance of duties of office or employment or to compensate him for the increased cost of living under section 10(14)(ii).

C. Total Amount of Salary received from Employer (3): This part of the form calculates the total salary received including allowances and other perquisites.

D. Deductions under Section 16 (4): Budget 2018 announced the standard deduction in lieu of transport and medical allowances received by the employee which can maximum amounts to Rs. 40,000 and then increased to 50,000 p.a. In the new form 16(a) separate column for standard deduction is introduced. All the deduction columns are mentioned below:

• Standard deduction under section 16(ia)
• Entertainment allowance under section 16(ii)
• Tax on employment under 16(iii)

E. Total amount of deduction under section 16(5)

F. Income Chargeable under the head Income from Salaries (6): This column shows the net income form salary after deduction of all the allowances and deductions. This includes Income from House Property and Income from Other Sources

G. Any other income declared by the employee as per section 192BB (7): This column of the form enables the employee to declare any other income with the proof of the income.

H. Total amount of other income reported by the employee (8): This column provides a total of all income earned by an employee other than salary.

I. Gross Total Income (9): This column of the form indicates the total income of employees reduced by the exemptions but before deduction under Chapter VI-A.

J. Deduction under Chapter VI-A (10): Earlier, there was no separate list of deductions, an option was there to disclose the section under which deduction has been claimed. But in Form 16, disclosure of deductions is required as per a separate list.

K. Aggregate of deductible amount under Chapter VI-A (11): This column totals the amount of deduction from all the sections under Chapter VI- A as claimed by the employee.

L. Total taxable Income (12): This column refers to the net income of the employee after considering deduction under Chapter VI-A.This is the amount on which tax is calculated.

M. Tax on Total Income (13): This column specifies the Tax amount as per the applicable tax slabs in column 12.

N. Rebate under section 87A, if applicable (14): This Column specifies the tax rebate, If the total income of a person doesn’t exceed Rs. 5,00,000/- then a tax rebate of 100% will be available to the person under this column subject to a maximum amount of Rs. 12,500/-.

O. Surcharge, wherever applicable (15): This column refers to the additional tax in form of a surcharge which is applicable if income exceeds a certain benchmark limit (currently 50lac, 100lac, 200lac & 500lac).

P. Health and Education Cess (16): This column is introduced in the new Form 16.

Q. Tax payable (17): This column is calculated as 13+15+16-14.

R. Relief under section 89 (18): This column refers to any relief which is allowed against the arrear of salary received in the Previous year.

S. Net tax payable (19)

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Eligibility Criteria for Form 16

Every salaried employee whose income falls under the taxable band is eligible for Form 16 according to regulations released by the Indian Government's Finance Ministry.
If an employee's income does not fall within the tax rates established, Tax Deducted at Source is not required (TDS). As a result, in certain situations, the employer is not required to give Form 16 to the employee.
However, many organisations now provide this certificate to employees as a good work practice because it contains a consolidated picture of the individual's earnings and has other applications.

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How does the Form 16 process work?

As per the procedure laid down by the Income Tax Department, the person deducting your tax files returns with the government. Thus, The TDS entries get updated in the department’s database once your employer files the TDS return. The last date to deposit the TDS for the month of March is April 30. The TDS return for the last quarter (Jan to March) is to be filed latest by 31st May. After the TDS return is filed, it takes 10 to 15 days to reflect the entries in the department's database. Then after, your employer downloads the Form-16 and issues it to you.

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How do I get Form 16?

Form 16 is issued by your employer and you can expect it by the end of May/June. But if it’s not issued by the end of June, then you may demand it from your employer. Generally, the accounts or HR department issues Form 16.

In case, If any person dosen’t receive his Form 16 and has got his TDS deducted then he/she may intimate the same to the Jurisdictional A.O. who may take appropriate action for same and if found employer guilty then carry out other further proceedings including levy of penalty

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I lost my Form 16, what should I do?

Form 16 is the most important document for you to file your income tax return and you should preserve this document carefully. But if you’ve lost it, do not panic, check your mail, whether it has been emailed to you by your employer or not. If it’s not sent to you on your email, then you can simply request your employer to issue a copy of Form 16.

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Can I file my return without form 16?

Yes, an income tax return can be e-filed even without income tax form 16, you are required to have all the necessary documents of your sources of income, any perquisites, allowances claimed, investments made, medical payments and any donations made.

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I haven’t received any Form 16 from my employer; do I still need to file my income tax return?

If your Gross Total Income exceeds 2,50,000 then it is mandatory to file an income tax return. Your employer is liable to issue form 16 only when he has deducted tax from your salary. If your employer does not deduct tax and your income exceeds the specified limit then even if you don’t have form 16, you are required to file your income tax returns.

There are various other conditions also, other than income above 250000 due to which a person would be mandatorily required to file ITR, major those are:

1. Deposit of more than 100 lac in one or more current account during the year.
2. Incurred expenditure of more than 2 lacs on foreign travel.
3. Incurred expenditure of more than 1lac on electricity

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I haven’t received Form 16, how do I calculate my Salary Income?

My employer has deducted tax from my salary, but neither did he issue me a Form 16 nor does my Form 26AS show any such deduction entries?

In such a case, it may be possible that your employer has deducted the tax from your salary but has not deposited the same in the credit of the Government account. ou must pay the full amount of tax while filing your income tax return. Also, you should immediately bring this matter or default to the notice of your employer.
Further, the employee should intimate the same to the Jurisdictional A.O. who may take appropriate action for same and if found employer guilty then carry out other further proceedings including levy of penalty.
(As per Gujrat high court decision on 30/11/2021 in case of Kartik Vijaysinh Sonavane v. DCIT - [2021] , it was held that TDS benefit would be given to employee even in case TDS has not been deposited by employer)
Need a CA to bail you out of this situation? Connect Now.

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I want to claim a deduction under Chapter VI / other exemptions/allowances in my income tax return which is not in my Form 16? Can I do it?

In a case where your employer issues you a Form 16 without any deductions, you can still claim the deduction on your income tax return. Form 16 is just a certificate issued by your employer which certifies deduction of tax (TDS) on your salary. It’s just a base document for return filing and not the final return itself. You can always take the benefit of the deductions you are eligible for while filing your income tax return even if the same is not mentioned in your Form 16.
Our experts say “Always remember to check whether the House Rent Allowance exemption has been taken in Form 16 or not (if you’re entitled to it). It is usually either not reflected or calculated at a wrong value especially in the case of multiple employers during the year. In such an event, you yourself can calculate it and take the exemption of same while filing your income tax return.” However, while claiming any such deduction which is at variance in value w.r.t. form 16 , income tax site will show a message which can be seen in the image shown below:-

Trouble filing your income tax return? Just click here!

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Salary arrears received but not shown in From 16, what to do?

If you have received arrears of salary, but the arrears are not shown in Form 16, then also you can show your arrears in the income tax return. All you required is all the details of salary in arrears and Form 10E which is required to claim relief on arrears of salary under section 89(1).

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How do I upload Form 16 and file my return?

You can upload income tax form 16 and e-file your return with Tax2win by following some simple steps:

• Upload Form 16: Visit our e-filing portal, select your sources of income & upload form 16.
• Review: Our advanced software automatically picks up the required information & fill in your details by itself. Simply review the information.
• File ITR: As soon as you give your confirmation, our system files your income tax return online.

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My Form 16 is incorrect, what should I do?

In case, where a Form 16 is duly issued but with a mistake, then the same can be rectified by your employer on your request. Subsequently, a revised Form 16 will be issued to you by your employer.

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Is Form 26AS different from Form 16?

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Is Income Tax Return and Form 16 the same?

No, a Form 16 is not equivalent to an Income Tax Return but it’s the source document for your salary income. It is really helpful, especially in case your entire income is from salaries and there is no other source of income. Further, you don’t need to attach your Form 16 with your income tax return.

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I switched my job during the year, how should I file my return now?

In case, you had two employers for the year, you will get Form 16 from both the employers for the respective months served by you. The income tax return will be filed by combining the details of both the Form 16s. But you must be careful in doing so because it might happen that both your former and present employer has calculated your tax after taking into consideration the basic exemption limit. In such a case, you are not entitled to take the benefit of the exemption limit twice, but only once.
The same applies to all deductions and allowances during the year, as any deduction/allowance can be claimed only once or as per the respective rules of the income tax law even if it is reflected in both the Form 16’s.
For example, in the year 2021-22, you worked with a company X Pvt. Ltd. for a period of 6 months for a salary of Rs. 45,000 per month and for the rest 6 months you joined Y Ltd. for Rs. 50,000 per month. In such a case, you draw a salary of Rs. 2,70,000 from X Pvt. Ltd. and Rs. 3,00,000 from Y Ltd. Now, both the companies X Pvt. Ltd. and Y Ltd. will deduct your tax after consideration of the basic exemption limit (i.e. Rs. 2,50,000/-) only and your Form 16 will be based on the same.
This means X Pvt. Ltd. will charge tax on the balance of Rs 20,000 and Y Ltd. will charge tax on Rs. 50,000, each giving you an exemption of Rs. 2,50,000. But, at the time of filing your final return for the year, you will be allowed the basic exemption only once and not twice i.e., your tax should be charged on Rs. 3,30,000. (Rs. 300000 + 270000 – 250000).
Further, when you switch jobs in a year, then you should furnish your previous employer’s TDS details to your new employer in Form 12B.

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Is Form 16 different from Form 60?

Form 60 is a declaration made by individuals who do not have PAN whereas Form 16 means an income certificate issued by the employer to an employee.

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Is form 16B part B of Form 16?

Form 16B is a certificate of tax deducted on sale of the property whereas part b of income tax form 16 consists of all the details of salary breakup, deduction and taxes paid by an employer on behalf of employees.