Budget 2024 Update
FM Nirmala Sitharaman has made two announcements for those opting for the new tax regime.
First, the standard deduction for salaried employees is proposed to be increased from Rs 50,000/- to Rs 75,000/-. Similarly, deduction on family pension for pensioners is proposed to be enhanced from Rs 15,000/- to Rs 25,000/-.
Second, in the new tax regime, the tax rate structure is proposed to be revised, as follows:
- 0-3 lakh rupees - NIL tax
- 3-7 lakh rupees - 5% tax
- 7-10 lakh rupees - 10% tax
- 10-12 lakh rupees - 15% tax
- 12-15 lakh rupees - 20% tax
- Above 15 lakh rupees - 30% tax
As a result of these changes, a salaried employee in the new tax regime stands to save up to Rs 17,500/- in income tax.
Form 16 is a certificate issued to salaried employees by their employer that provides a detailed summary of TDS deducted and deposited to the Income tax authorities. Form 16 is an important document issued under the Income Tax Act of 1961 provisions.
Each salaried employee can obtain Form 16 from the employer on or before the 15th of June of the following year, immediately after the financial year in which the tax is deducted. If any employer delays or fails to issue Form 16 by the specified date, he is liable to pay a penalty of Rs.100 per day until the default continues.
Employers are required to issue Form 16 to their salaried employees on or before the 15th of June of the assessment year for which the income tax return is being filed. For example, for the financial year 2023-24 (assessment year 2024-25), Form 16 should be issued by 15th June 2024.
There are two types of Form 16: Form 16A and Form 16B. Both are related to Tax Deducted at Source (TDS), but they serve different purposes. Here is what each form is used for:
Form 16A: Form 16A is a certificate for Tax Deducted at source (TDS) and is provided along with Form 16. Both Form 16 & 16A are TDS certificates, but Form 16 is for individuals who receive income from salary. On the other hand, Form 16A is for all incomes other than salary.
Form 16B: Form 16B is a certificate of tax deducted on the purchase of property; TDS under section 194IA is required to be deducted when a person buys an immovable property for consideration greater than 50 lakhs of rupees. In such a case, the buyer will be required to deduct the TDS of the seller and file form 26QB; after filing 26QB, form 16B will be generated, which serves the basic purpose of the TDS certificate depicting the basic details of the buyer and seller of property and consideration and amount of TDS deduction.
You can read more about From 16A and Form 16B here.
Once you download Form 16, you can check the Form 16 consists of two parts - Part A and Part B.
Part A:
This section contains details such as the employer's and employee's PAN (Permanent Account Number), employer's TAN (Tax Deduction and Collection Account Number), summary of tax deducted and deposited by the employer (TDS), and other relevant details.
Part A consists of the following -
- Name and Address of the employer
- PAN and TAN of the employer
- Employee’s PAN
- Quarterly summary of total salary payments for the relevant FY.
- Summary of quarterly tax deducted and deposited as certified by the employer.
Part B:
Part B provides a more detailed picture of your income like the employee's salary, allowances, deductions claimed by the employee (such as under Section 80C, 80D, etc.), and the resultant taxable income. It is an annexure to part A. It also includes details of income from other sources, if any.
Some constituents of Part B are -
- Detailed breakup of salary
- Detailed breakup of allowances exempted under section 10
- Deductions allowed under the IT Act under Chapter VI-A
- TDS deducted by the employer
Form 16 serves as a vital document for salaried individuals when filing their income tax returns. It provides key information about the employee's salary, TDS, and deductions. It shows the breakup of salary income and the TDS amount deducted by the employer. The details from Form 16 need to be accurately filled in the relevant sections of the income tax return form. There are certain details that need to be derived from Form 16 while filing ITR. Here is the information required -
- Exempted allowances under section 10
- Break down of deductions under section 16
- Taxable salary
- Income from house property reported by an employee and offered for TDS
- Income under ‘Other sources’ offered for TDS
- Section 80C deductions in detail
- Aggregate of section 80C deductions
- Tax payable or refund due.
Note: Form 16 serves as proof that your employer has deducted and deposited tax on your behalf to the government. This can be helpful in case of any inquiries from the income tax department.
It is essential for employees to cross-verify the details mentioned in Form 16 with their salary slips, bank statements, and Form 26AS (consolidated statement of taxes deducted and paid) to ensure accuracy and identify any discrepancies. If any discrepancies are found, they should be promptly brought to the employer's attention for rectification.
Form 16 acts as proof of tax payment and helps employees reconcile their income and tax deducted. It provides a clear overview of the salary structure and facilitates easy calculation of taxable income. It also helps employees determine their tax liabilities and claim eligible deductions while filing their income tax returns.
The due date to issue Form 16 for FY 2023-24 is 15th June 2024, and if the employer has deducted TDS on the employee's salary from April '23 to March '24, then Form 16 must be issued by the employer on or before 15th June '24. If the employee loses their Form 16, they can request a duplicate copy from their employer. The employee can also download Form 26AS from the income tax e-filing portal, which contains details of the TDS deducted and deposited against their PAN. This can also serve as proof of the TDS deducted and deposited.
Form 16 is a crucial document for salaried individuals in India, as it serves multiple purposes:
- Proof of Income and Tax Paid: Form 16 is a certificate provided by an employer to an employee, showing the salary paid during the financial year and the tax deducted at source (TDS) on that salary. It is proof that the employer has deducted and paid the tax on behalf of the employee.
- Income Tax Return (ITR) Filing: Form 16 simplifies the process of filing an income tax return. It provides a summary of the employee's earnings and the tax deducted, making it easier to calculate taxable income and claim deductions.
- Documentation for Financial Purposes: It can be used as proof of income when applying for loans, credit cards, or other financial services.
- Verification by Tax Authorities: If the income tax department has any queries or discrepancies in the income tax return, Form 16 serves as an official document that provides the necessary details of salary and TDS.
- Compliance with Tax Laws: It helps employees and employers ensure compliance with tax laws and regulations, as the form reflects accurate and timely payment of taxes.
Upload Form 16, and our software will automatically pick up all the relevant information from your Form 16 and prepare your tax return. There is no need to enter anything manually. File your ITR hassle-free.
According to regulations released by the Indian government's Finance Ministry, every salaried employee whose tax has been deducted, whether they fall under the tax exemption limit or not, is eligible for Form 16.
If an employee's income does not fall within the taxable band, Tax Deducted at Source is not required to deduct. As a result, in certain situations, the employer is not required to give Form 16 to the employee. However, many organizations 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.
Note: If you switched jobs during the financial year, you should receive a separate Form 16 from each employer who deducted TDS from your salary.
This part of income tax form 16 covers employer, employee, and TDS payment details. It shows quarter-wise details of your tax deposited with the government. Some details are:
- Name and Address of the employer.
- PAN and TAN of the employer.
- Name and Address of the employee
- PAN of the employee
- Summary of taxes deducted and deposited quarterly by the employer
This part shows the detailed computation of Income, based on 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 based on applicable tax slab rates. The details mentioned in Part B are as follows:
- Whether opting for Taxation under section 115 BAC: Yes or No
(for a better understanding of 115 BAC, please refer to our guide on 115 BAC or click here)
A. Gross Salary(Column 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(Column 2): Earlier in this part of the form, combined information of all the exemptions under Section 10 was provided, 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 is 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
C. Total Amount of Salary received from Current Employer (Column 3): This part of the form calculates the total salary received, including allowances and other perquisites.
D. Deductions under Section 16 (Column 4): 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 (Column 6): This column shows the net income from salary after deduction of all the allowances and deductions.
G. Any other income declared by the employee as per section 192(2B) (Column 7): This column of the form enables the employee to declare any other income with the proof of the income like Income (or admissible loss) from the house property, Income under the head Other Sources offered for TDS.
H. Total amount of other income reported by the employee (Column 8): This column provides a total of all income earned by an employee other than salary.
I. Gross Total Income (Column 9): This form column indicates the total income of employees reduced by the exemptions but before deduction under Chapter VI-A.
J. Deduction under Chapter VI-A (Column 10): Earlier, there was no separate list of deductions; an option was to disclose the section under which the deduction has been claimed. But in Form 16, disclosure of deductions is required as per a separate list.
K. Aggregate deductible amount under Chapter VI-A (Column 11): This column totals the deduction amount from all the sections under Chapter VI- A as claimed by the employee.
L. Total Taxable Income (Column 12): This column refers to the employee's net income after considering deductions under Chapter VI-A.This is the amount on which tax is calculated.
M. Tax on Total Income (Column 13): This column specifies the Tax amount as per the applicable tax slabs i on taxable income as per column 12.
N. Rebate under section 87A, if applicable (Column 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% of the tax amount will be available to the person under this column subject to a maximum amount of Rs. 12,500/-.
As per Finance Act 2023, under the new regime, if total income doesn’t exceed Rs. 7,00,000, then a tax rebate of 100% of the tax amount will be available.
O. Surcharge, wherever applicable (Column 15): This column refers to the additional tax as a surcharge applicable if income exceeds a certain prescribed limit (currently 50 lac,1cr, 2cr, and 5cr).
P. Health and Education Cess (Column 16): This column is introduced in the new Form 16.
Q. Tax payable (Column 17): This column is calculated as 13+15+16-14.
R. Relief under section 89 (Column 18): This column refers to any relief allowed against the arrear of salary received in the previous year.
S. Net tax payable (Column 19)
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 24Q for which you want to generate Form 16-Part A. Request for Form 16-Part A will only be submitted when the statement status is either "Processed with Default." or "Processed without Default." To check the statement status, you have to go through a tab named Statement Status, placed directly under the Statement/Payment Tab, and select the form type and Financial Year.
Step 3. Click on the Form 16 option in the Download Tab
Step4. Select the financial year for which you want to download Form 16 Part 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-Part A will appear on the screen; you just have to click “Submit” to proceed. In case 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 be chosen in case 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, for the same financial year, for the same Form Type, and for the same Quarter.
Step 7. One unique request number will be generated, which can be used to track the status of the request. Moreover, Form 16-Part 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-Part A into PDF format.
Step 11. Run the setup of Form 16 PDF converter utility 1.4L to generate Form 16-Part A in PDF format.
- Log on to the TRACES (TDS Reconciliation Analysis and Correction Enabling System) website. The URL for TRACES is https://www.tdscpc.gov.in.
- If you are accessing the website for the first time, you must register an account. Provide all the required details for registration.
- The details you submit during registration will be validated, and your account will be created. Your PAN number will be used as your username, and you can choose a password of your choice.
- An activation link will be sent to your registered email address. You will also receive an activation code on your registered mobile number. Use these to activate your account.
- Once your account is activated, log in to TRACES using your PAN and password.
- In the download section of TRACES, locate and select "Form 16B for Buyer."
- Provide the assessment year, PAN number, and seller acknowledgment number. This information is required to generate Form 16B.
- After submitting the necessary details, Form 16B will be made available for download in the Downloads section of TRACES.
- Download Form 16B and print it out.
- Sign the printed form and deliver it to the buyer.
- The buyer can also refer to their Form 26AS, which is a consolidated statement of total TDS deducted. It includes details reflected in Form 16, Form 16A, and Form 16B, providing a comprehensive overview of TDS deductions.
Downloaded Form 16? Time to file your ITR. Simply upload the downloaded Form 16 here and file your ITR hassle-free.
Your employer issues form 16; you can expect it by the end of 15th June. But if it’s not issued by the end of 15th June, you may demand it from your employer. Generally, the accounts or HR department issues Form 16. Even if you have left your job, if you have requested, the employer cannot deny providing you with Form 16.
In case any person doesn’t receive his Form 16 and has his TDS deducted, then he/she may intimate the same to the Jurisdictional A.O., who may take appropriate action for same and, if finds an employer is guilty, then carry out other further proceedings including levy of penalty.
If you do not have Form 16, you can still file your income tax return by following these steps:
- Gather salary slips: Collect all your salary slips or payslips for the financial year for which you are filing the income tax return. These payslips should contain salary details, allowances, deductions, and any other income components.
- Calculate taxable income: Consolidate the information from your salary slips and calculate your taxable income. Consider all the components of your salary, such as basic salary, allowances, perquisites, bonuses, etc. Subtract any applicable deductions such as house rent allowance (HRA), standard deduction, professional tax, etc. This will give you your taxable income.
- Refer to bank statements: Review your bank statements to identify income sources other than your salary. This could include interest income, dividends, or any other form of income. Include these amounts in your taxable income calculation.
Verify Form 26AS: Access your Form 26AS through the Income Tax Department website. Form 26AS is a consolidated statement of all the taxes deducted and deposited against your PAN. Verify that the TDS details mentioned in Form 26AS match your calculated income details. If there are any discrepancies, contact the deductor (employer or bank) to rectify them.
Read More here.
If you are facing any difficulties with filing ITR or have confusion on multiple Form 16 or no Form 16, you can get assistance from our online CAs.
If you identify a mismatch between Form 16 and Form 26AS, it is important to rectify the discrepancy. Here are the steps you can take to rectify the mismatch:
- Contact your employer: Inform your employer about the mismatch and provide them with the necessary details and documentation. Share copies of Form 16 and Form 26AS, highlighting the specific areas of discrepancy. Ask your employer to rectify the information in Form 16 and issue a revised form with the correct details.
- Coordinate with your employer: Work closely with your employer to ensure that they promptly rectify the errors in Form 16. Provide any additional supporting documents or information required by your employer to rectify the mismatch.
- Update Form 26AS: After your employer has rectified the errors and issued a corrected Form 16, the revised information should be updated in Form 26AS. However, it may take some time for the updated information to reflect in Form 26AS, as it depends on the timelines of TDS return filing by your employer.
- Cross-verify and reconcile: Once the revised Form 16 and updated Form 26AS are available, cross-verify the information in both documents to ensure that the discrepancies have been resolved. Make sure that the details in Form 16 now match the updated information in Form 26AS.
- File your income tax return: Once you have verified that the mismatch has been rectified, you can proceed to file your income tax return. Use the corrected Form 16 and updated Form 26AS to accurately report your income and taxes while filing your return.
Tips:
- Maintain copies of all communication with your employer regarding the Form 16 mismatch.
- It's recommended to download a fresh copy of Form 26AS before filing your Income Tax Return (ITR) to ensure the latest information is reflected.
Form 16, Form 16A, and Form 16B are certificates issued for Tax Deducted at Source (TDS) in India, but they serve different purposes and apply to different types of transactions. Here's a breakdown of each:
Form 16
- Purpose: Issued by employers to their employees.
- Details: It provides a detailed summary of the salary paid and the TDS deducted from the salary throughout the financial year.
-
Parts: It consists of two parts:
- Part A: Contains details like the employer's and employee's PAN, TAN, address, and TDS deposited with the government.
- Part B: Includes details of salary paid, deductions allowed under the Income Tax Act (like 80C, 80D, etc.), and the tax payable or refundable.
Form 16A
- Purpose: Issued for TDS on income other than salary.
- Details: It applies to income such as interest on fixed deposits, insurance commissions, rent receipts, and other non-salary incomes.
- Components: It provides details of the amount paid and the TDS deducted on such payments. It includes information like the deductor’s and deductee’s PAN, TAN, and the amount of TDS deducted and deposited.
Form 16B
- Purpose: Issued for TDS on the sale of property.
- Details: It is used to certify that the TDS has been deducted on the sale of immovable property (under Section 194IA of the Income Tax Act).
- Components: It includes details of the property sold, the buyer's and seller's PAN, the total consideration for the property, and the TDS deducted and deposited.
Summary
- Form 16: For TDS on salary income.
- Form 16A: For TDS on non-salary income (like interest, commission, rent).
- Form 16B: For TDS on the sale of property.
Each form serves to document and verify the TDS deducted and ensures that the tax compliance requirements are met by both the deductor and the deductee.
Got your Form 16 from your employer? The deadline for filing your ITR is fast approaching, so don't wait until the last minute. File your ITR now or hire a CA for tax filing to ensure accurate income tax return filing and maximize your tax refund. Take advantage of our online CA services and get CA-assisted ITR filing. Book eCA now!
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