Understanding Form 16 | If you are an employee, I am sure you have already received Form 16. This

 information is issued by employers every year. It is very important to understand the details of form 16.

 Understanding the content of form 16 will help you to easily file your tax return.

 

So what is Form 16?

This is a certificate under section 203 of the Income Tax Act of 1961, which contains information about the withholding tax (TDS) on accrued income in the payroll entry. It contains detailed information on the taxes deducted by your employer. Put simply, Form 16 is the "wage/income statement" issued by your employer.

 

In this post, let's break it down: what are the different sections in Form 16? What is the difference between Form 16 Part A and Part B? What is the relationship between Form  16 Part A and Form  16 Part B? How to check if TDS is filed or not? How do you use Form 16 to submit your tax return? What should you do if you have multiple Form16s?

Download and Prepare at a time 50 Employees form 16 Part A&B for the F.Y.2021-22

Understanding Form 16


Form 16 - Details 

 

Form 16 is a useful document. It consists of two sections: "PART A" and "PART B". 

Understanding Form 16

• Name and address of the employee

• Name and address of the employer

• PAN and TAN number (tax code) of your employer (computer)

• TIN of the employee

• Billing year (the year in which the tax burden is calculated on the income earned in the previous year. If the fiscal year or the previous year is 2019-2020, the billing year will be 2020-2021)

• Part A contains a summary of the TDS deductions. (This summary can be quarterly / monthly or based on how often your employer deducts TDS and credits the tax to the IT department)

• This section also contains detailed information on the “busy period”. (If you worked for two or more companies during a fiscal year, you will have more than 16 modules)

Part B of form no. 16 contains the following information:

• Income accrued under the item "Salary". (Includes wages - allowance and deductions (e.g. LTA / HRA / business tax, etc.)

Download and Prepare at a time 50 Employees form 16 Part B for the F.Y.2021-22

 

Understanding Form 16

 • Gross income is wage income + any other income listed. (Other income could be negative income, e.g. loss from your home, property or capital gains, etc.)

• The deductions of section 80c / 80 ccc / 80 CCD are further provided. (The maximum limit is One lack and Fifty Thousand)

Then there are the deductions for other sections, such as 80D (health insurance contributions), 80E (student loan interest), 80G (donations), and others. (Would you provide proof of investment to your employer for tax credits, these tax credits are listed here)

 

The total allowable deductions (together with the deductibles referred to in Chapter VI A: Sec. 10) are deducted from the gross income (Item no. 8) to obtain the "taxable income" (Item no. 11). The tax is calculated (item 12) on this amount according to the tax table.

Download and Prepare at a time 100 Employees form 16 Part B for the F.Y.2021-22

 

form 16

• If your employer deducts TDS, this amount will be deducted from your full tax liability. The net tax amount may be zero (or) a payable (or) refundable tax amount.

 If your wage income exceeds the basic tax exemption limit (Rs 2.5 lakh for the 2014-2015 fiscal year), your employer is required to deduct TDS from your salary and deposit it into the government account.

 

If you have also disclosed your income from other executives to your employer, they will consider your total income for the TDS deduction. If your income is below the minimum exemption limit, your employer will not deduct any TDS and will not be able to issue you this form. If you have worked with more than one employer during the year, you will have more than one module 16.

Download and Prepare at a time 100 Employees form 16 Part A&B for the F.Y.2021-22

Form 16 Part A&B