How to Generate & Fill Form 16? Form 16 Part A & Part B
According to the Income Tax Act 1961, each employer must deduct a TDS (Tax Deducted at Source) when paying salaries when the employee's salaried income is taxable. The TDS deducted is then deposited to The Income Tax Department, and Form 16 serves as proof of the same.
Employers must issue Form 16 to the employees by 15th June of the Assessment year, i.e., the financial year immediately following the financial year in which the tax was deducted.
For FY 2022-23, Form 16 must be issued by 15th June '23 at the latest. If you lose your Form 16, you can request a duplicate from your employer.
What is Form 16?
Form 16 is a document issued to salaried professionals by their employers per the guidelines in Section 203 Income Tax Act, 1961. Also called a TDS certificate provides all the details about the salary given to the employee in a particular financial year and the income tax deducted from the individual's salary by the employer or organization.
Form 16 is an important document for taxpayers, as it is required for filing Income Tax Returns (ITR) with the Income Tax Department. It serves as proof of income and tax paid by the employee during the financial year and is also used to verify the details mentioned in the ITR. In case of any discrepancy, taxpayers can raise objections and rectify them with their employer's help. Form 16 is divided into two parts: Part A and Part B. Part A contains the employer's and employee's details, including the name and address, Permanent Account Number (PAN), and TDS details. Part B contains the details of salary paid, exemptions allowed, deductions claimed, and tax payable on the employee's income. Read more about Form 16.
Components in Form 16
Form 16 is one of the most important forms for salaried employees; it contains all the information regarding the salary paid and the tax deducted.
Form 16 is divided into 2 sub-parts, both equally important, which are given below:-
Part A of Form 16
Part A of Form 16 gives the summary of tax collected by the employer from an employee’s salary on his/her behalf and deposited with the government. It is a certificate of guarantee signed by the employer, effectively declaring he/she has already deposited the TDS deducted from the employee's salary.
Details to be filled in Form 16 Part A
Part A of Form 16 contains the following details that need to be filled in:
- Personal Information: Personal Information of Employee as well as Employer; this includes name, address, Permanent Account Number (PAN), and employer’s TAN (TAN is a number allotted to an account which is responsible for deduction and collection of taxes). These details help the IT Department track the money flow from employees’ and employers’ accounts.
- Assessment Year: This indicates the year of assessment or, in simple words, the year in which the taxpayer needs to file for a tax return process. For example, for the income earned between April 2022 and March 2023, the Assessment year will be 2023-24.
- Time Period: The time period for which the employee was working for the employer in the given financial year.
- Summary of the salary that was paid
- The date on which the Tax was deducted
- Date of tax deposition with the government
- Summary of the tax that was deducted as well as deposited with the Income Tax Department
This part of Form 16 is generated through the Income Tax Department Traces portal. Apart from what is mentioned above, it also provides the BSR code of the bank from which payments are made, challan numbers, and other specific details for future reference.
It is required that Part A should be signed by the deductor manually or digitally.
Part B of Form 16
Part B of Form 16 is concerned with the statements regarding salary paid, any other income as disclosed by the employee to the employer, and things like the amount of tax paid and tax due. This part of Form 16 presents the information mentioned above comprehensively and orderly, declaring income earned by the employee with the various exemptions and allowances applicable in a specific format as referred.
Details to be filled in Part B
Part B of Form 16 contains the following details that need to be filled in:-
- Total Salary: The salary structure is further broken down into components like House Rent Allowance, Leave Travel Allowance, Leave encashment, Gratuity, etc.
- Exemptions: All the relevant exemptions permissible according to Section 10 of the Income Tax Act 1961 are mentioned in this part of the form
- Gross Income: This is the summation of regular salary plus any other income produced or received by the employee through various means such as housing rent, interest income, and any other incomes.
- Details regarding other sources of income need to be shared by an employee with his employer during investment proof submission.
- Various deductions: Various deductions such as deductions under section 80C/80CCC/80CCD, including the contributions made towards instruments or schemes like Public Provident Fund (PPF), Life Insurance, Tax Saving Mutual Funds, Pension, Tuition Fee Tax Deduction for Children accounting for a total of up to Rs.1.5 lakh.
- Net Taxable Salary: Various Tax deductions are aggregated under Chapter IV-A and then deducted from gross income to calculate the net taxable income. This amount is used to calculate your actual tax liability.
- Education cess and surcharges as applicable
- Rebate under Section 87, if and when applicable
- Rebate under Section 89, if any
- The total tax payable on an employee’s income
- Tax deducted and balance tax due or refunded as applicable
Types of Form 16
Like Form 16, Form 16A is also a TDS certificate, but it is a TDS certificate for TDS deducted on income other than salary. This certificate includes details such as TDS deducted by your bank on income earned from interest rates on fixed deposits, TDS earned on rent income, TDS on insurance commission, and any other income which is liable for such deduction. Form 16A provides comprehensive details on TDS deducted and deposited on such incomes. Similar to Form 16, Form 16A also contains the name and address of the deductor and deductee, PAN details, TAN details of the deductor, Challan receipts of TDS deposited on these incomes and few other details.
Like Form 16A and Form 16, Form 16B is another TDS certificate; this one is concerned with the TDS deducted on sales of property and reflects the TDS amount deducted on the property deposited by the buyer with the Income Tax Department. The buyer has to deduct a 1% TDS on the immovable property purchased from the seller and submit it to the income tax department and then later generate and provide Form 16B to the seller. Form 16B proves that TDS on property sales has been deposited with the Government.
What are the eligibility Criteria for Form 16?
According to the regulations provided by the Finance Ministry of the Govt. of India, every salaried person falling under the tax bracket is eligible for Form 16.
If any employee doesn’t fall under the tax bracket, he/she is not entitled to get TDS deducted. So under such circumstances, the company is not obligated to provide Form 16 to the employee.
These days, many companies provide a Form 16 in these cases also because it gives a complete picture of consolidated earnings and has other uses as well.
How to generate Form 16 from Traces?
Generating TRACES Form 16 Part A
Step 1. Login into the TRACES website (www.tdscpc.gov.in) by entering a User ID, Password, TAN of the deductor, and the verification code
Step 2. Check the status of your TDS return 24Q4 for which you want to generate Form 16-A. Request for Form 16-A will only be submitted when the statement status is either "Processed with Default." or "Processed without Dproperty salesthe statement status, you have to go through a tab named statement status placed directly under Statement/Payment Tab and select the form type and Financial Year.
Step 3. Click on the Form 16 option in Download Tab
Step 4. Select the financial year for which you want to download Form 16-A and select any one download option out of “Search PAN Download” or “Bulk PAN download”.
*Search PAN Download is to download Form 16 Part A for selected valid PAN holders
*Bulk PAN Download is to Download Form 16 Part A for all eligible PAN holders for the financial year.
Step 5. Details of Authorised Persons to be printed on Form 16-A will appear on the screen; you just have to click “Submit” to proceed. If you want any changes, click “Cancel” and update the details from the profile section.
Step 6. Now fill in the KYC details by selecting one of the options from Digital Supported KYC or Normal KYC validation
*Digital Supported KYC is valid only when the deductor has a valid digital signature registered with TRACES.
*Normal KYC validation can opt if a digital signature is not registered with TRACES.
After providing the correct KYC details, an authentication code will be generated, which will be valid for the same calendar day, the same financial year, and the same Quarter.
Step 7. One unique request number will be generated, which can be used to track the request's status. Moreover, Form 16-A can only be downloaded when the status is ‘Available”.
Step 8. Form 16 Part-A can now be downloaded from the Download >> Requested Download, using HTTP Download or Download Manager.
Step 9. Select the download type depending on the number of files you need to download
*HTTP download for a small number of files, a Download Manager for a large number of files.
Step 10. Download Form 16 PDF converter utility 1.4L if you want to convert Form 16-A into PDF format.
Step 11. Run the setup of Form 16 PDF converter utility 1.4L to generate Form 16-A in PDF format.
Generating Form 16 Part B
Form 16 Part B is manually generated by the deductor and issued to the deductee post-due verification and authentication along with the Part-A of Form B
Generating Digitally Form 16 from Smart Form 16 Software
Step 1. Download a Digitally Signed Form 16 Application. These are available online.
Step 2. Download a Smart Excel software for Form 16 as well as a Form 16 Merger Utility Software
Step 3. Open Smart Excel and start to fill out the details to generate Form 16 as per the headings given in the sheet.
- Deductor Details: Fill in the details of the deductor
- Form 16 Details: Fill annual salary details for all the employees mentioned in the sheet
- 80C: Fill in 80C details for all the employees mentioned in the sheet
- 80C Others: Fill 80C others deductions for all the employees mentioned in the sheet
- TDS details: Fill in the TDS deduction details for all the employees mentioned in the sheet
- Prerequisite: Fill in the prerequisites for all the employees mentioned in the sheet
- Salary Annexure: Fill in the salary annexure details for the employees mentioned
Step 5: After filling in all the necessary details, generate a Form 16 PDF.
Step 6: After installing Form 16 Merging Software, merge TRACES Part-A and Part-B and Digital Sign Form 16
Step 7: You may provide the Forms to your employees through hard copies or mail.
Preserving Form 16
Although Form 16 is required while filing Income Tax, it is recommended that employees preserve it for at least 6 years from the date of issuing.
Frequently Asked Questions
Q- What is Form 16A, and what is the difference between Form 16 and Form 16A?
If you are not a salaried employee and work for an organization on a contractual basis, you will receive Form 16A based on the services rendered, and the form will show the TDS deducted from payments made to you.
The basic difference between Form 16 and Form 16A is that Form 16 is rendered exclusively for salaried employees. In contrast, Form 16A is rendered for all other sources of income except those related to buying and selling immovable property.
Q- Does no Form 16 mean No Tax Return?
The responsibility of deducting and submitting TDS is the task of an employer if in case the organization fails to do so in time, they are charged Rs.100 per day of default as per Section 272(A).
If, after multiple requests, the organization fails to issue the certificate, the employee should immediately contact the Assessing Officer. The Assessing Officer will take the remedial action taking TDS as not submitted.
Q- Do I need to attach Form 16 while filling out Income Tax?
The Income Tax Department states that it is not necessary to attach Form 16 while filling out your income tax; however, in your interest, you can attach a photocopy of the same while retaining the original document for a recommended time of at least 6 years after the day it was issued to you.
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