Income Tax Form 16
Income Tax in India, as it is known, is a direct tax payable on Income or Profit. The government of India levies it. The money collected through it is one of the sources to be used by the government for investment in Infrastructure or other schemes. The present Income Tax Act was passed in 1961. It is subject to amendment every year through the Finance Budget to take care of inflation and other economic and social conditions.
The Income tax is payable by an individual who is less than 60 years old during the financial year if his or her income calculated as per the provisions during the financial year exceeds the exempt limit, i.e., Rs 2.5 Lakh (applicable for the FY 2019-20).
In the case of an individual who is aged between 60 years and 80 years (called as Senior citizens) during the financial year, he or she is liable to pay tax if his or her income calculated as per the provisions of Income-tax exceeds Rs 3 Lakh (applicable for the FY 2019-20).
In the case of individuals who are above the age of 80 years during the financial year (called as Super Senior Citizens), they are liable to pay income tax in case their income exceeds Rs 5 Lakh (applicable for the FY 2019-20).
In case the taxable income exceeds Rs 5 Lakh, a surcharge is payable @ 10% of Income Tax calculated as per the provisions. Further, if the income exceeds Rs 1 Crore, the surcharge is payable at the rate of 15%.
Additionally, Health and Education Tax @ 4% of Income Tax is payable in all the cases where income exceeds the exempt limit.
In the case of an individual, who is a resident of India during the financial year, a rebate under section 87A is provided if his or her total taxable income does not exceed Rs 5 Lakh. The amount of the rebate supplied under Section 87A is 100% of the Income Tax or Rs. 12,500, whichever is less.
For calculation of Income-tax liability of an individual, there are different tax rates for various slabs of Income (Applicable for FY 2019-20)
For an individual who is less than 60 years during the fiscal year, the income tax slab rates are as follows:
|Income Range (Rs.)||Rate of Income Tax|
|Up to Rs 2.5 Lakh||Nil|
|Rs 2.5 Lakh to Rs 5 Lakh||5%|
|Rs 5 Lakh to Rs. Rs 10 Lakh||20%|
|Above Rs 10 Lakh||30%|
For a resident individual, whose age is between 60 years and 80 years (called Senior Citizen) during the financial year, the slab rates are as follows:
|Income Range (Rs)||Rate of Income Tax|
|Up to Rs 3 Lakh||Nil|
|Rs 3 Lakh to Rs 5 Lakh||5%|
|Rs 5 Lakh to Rs 10 Lakh||20%|
|Above Rs 10 Lakh||30%|
For a resident individual, whose age is above 80 years (called Super Senior Citizen), the rates are as follows:
|Income Range (Rs.)||Rate of Income Tax|
|Up to Rs 5 Lakh||Nil|
|Rs 5 to Rs 10 Lakh||20%|
|Above Rs 10 Lakh||30%|
The Income Tax Slabs are subject to revision every year through the Finance Act, though rates and slabs don't need to change every year, and they can be kept the same.
In addition to individuals, Income Tax is also payable by other assesses such as Hindu Undivided Family (HUF), Partnership Firm, Company, LLP (Limited Liability Partnership), Body of Individuals (BOI) & Association of Persons (AOP).
This article explains about Form 16, when it is required, features and benefits of Form 16, who is eligible for this, and how to get/download it.
What is Income Tax Form 16?
Income Tax Form 16 is a certificate issued by an employer to its employee certifying the amount of tax deducted on employee’s salary. It enables employees to prepare and file their ITR. The deadline for the issuance of Form 16 is June 15 every year.
Form 16 has two components-Part A & Part B. The Part-A of Form 16 contains details of Employer’s Name & Address, Employer’s PAN & TAN, PAN of the employee & particulars of tax deducted and deposited by the employer on employee’s salary quarterly. Part B is an annexure to Part A. It has the details of salary break-up, the break-up of exempted allowances under Section 10, details of deductions allowed under Chapter VI A, and details of relief under Section 89 of the Income Tax Act.
The details of deductions allowed under Chapter VIA field in Form No.16 have following areas for various types of deductions under multiple sections of the Income Tax Act:
- Deductions under Section 80 C- Premium paid by the employee for Life Insurance policy, Contribution to PPF, etc
- Deductions under Section 80 CCC- Contribution for PF
- Deductions under Section 80 CCD (1) - Contribution by the employee for pension scheme
- Deductions under Section 80 CCD (1B) - Additional deduction for Contribution by the employee towards the pension scheme
- Deductions under Section 80CCD (2) - Contribution by the employer towards the pension scheme
- Deductions under Section 80 D - Premium paid by the employee for Health Insurance
- Deductions under Section 80 E - Payment of Interest on Education loan taken by the employee
- Deductions under Section 80 G - Donations given to Prime-Minister Relief Fund, Charitable trusts, etc.
- Deductions under Section 80 TTA -Deduction for Interest on Savings Account
Form 16 is a basic requirement for filing Income Tax return by salaried employees whose income is taxable, and the employer has deducted tax from their salaries. There are certain details in the form which are required for filing ITR. These details are as following:
- Details of Exempt Allowances under Section 10 of the Income Tax Act
- Taxable Salary
- The break-up of deductions under Section 16 of the Income Tax Act
- Income from House property declared by the employee
- Income from Other Sources, if any declared by the employee
- The breakup deductions under Chapter VIA of the Income Tax Act namely under Section 80 C, Section 80 CCC, Section 80 CCD (1), Section 80 CCD (1B), Section 80 CCD (2), Section 80 D & Section 80 E of the Income Tax Act, 1961
- Aggregate of deductions under Section 10(a), Section 10 (b), Section 10 (c), Section 10 (d), Section 10 (e), Section 10 (f), Section 10 (g), Section 10 (h), Section 10 (i) & Section 10 (j) of the Income Tax Act
- Total of Tax deducted at source by the employer
- TAN of the employer
- PAN of the employer
- Name and Address of the employer
In case of Form 16 is not issued by the employer, an employee can file the return based on Form 26 AS available on the Income Tax e-filing portal. But employees should always insist on getting Form 16 from the employer. Still, at times there can be discrepancies between Form 16 & 26 AS.
Why is Form 16 required?
Every employer must deduct tax at source and issue to issue Form 16 to any employee whose income during the financial year is above the exempt limit.
It is a proof that the tax which has deducted from the salary of the employee is deposited with the government.
Whether a person is filing a return on own or through a Chartered Accountant or an Income Tax practitioner, Form 16 enables to the point of the Annual Income Tax Return as it has the details which are required to file the Income Tax Return.
It also serves as an Income Proof while applying for a credit card or any type of loan with a bank or a financial institution.
Features & Benefits of Form 16
The following are some of the features of Form 16:
- It can be called for at the time of Income Tax scrutiny as an Income proof
- It is not required to be issued in case the employee’s income is below the tax bracket.
- An employer must give this form to employees whose income during the financial year is more than the exempt limit. In case an employee has worked for more than one employer during the financial year, the first employer is required to deduct the tax at source if the Total Income of the employee is expected to be above the exempt limit. All subsequent employers are also required to deduct tax at source and issue the form if Total Income of the employee from the employer including the income from past employers is going above the exempt limit
- It serves as the proof of salary, an employee receives
- It has details of the tax paid by the employer on behalf of the employee
- Form 16 can be issued by only those employers who have a Tax Deduction Account Number (TAN)
The following are the benefits of Form 16:
- It is an aid to file an employee’s Income Tax return: The details in Form 16 are required for online filing.
- It is the conclusive proof that the employer has deducted and deposited TDS.
- It enables a person to calculate his or her tax liabilities: There might be instances where the employer has deducted less tax or has deducted more tax from the salary of the employee. Form 16 enables an employee to pay the remaining tax or claim refund, in case excess tax has been deducted
- It can be used as an Income Proof while applying for a credit card or loan: Form 16 serves as an Income proof while applying for a Credit card or loan as it gives the detailed break-up of an employee’s salary. Hence, it enables financial institutions to assess the financial position of the borrower and according to determine the credit limit to be granted while the issuance of a credit or maximum amount of loan that can be given
- Various foreign embassies and consulates ask it for visa processing: At times, foreign embassies and consulates ask for Form 16 to know the economic stability of the salaried individual
Who is Eligible to Get Form 16?
As per the rules and regulations of the Finance Ministry of India, every salaried individual who has income more than the taxable limit is entitled to get Form16 from his or her employer.
How to Get/Download Form 16?
An employer can only download Form 16 on the TRACES website. An employee cannot download it. An employee can get the Form 16 issued from his or her employer.
The following are the steps for an employer to download Form 16 to be issued to an employee:
- Go and login to the TRACES website by entering User Id, Password, TAN of the deductor, and the verification code
- After the landing page is displayed, go to “Statement/Payment Tab” to check the statement status. If the Statement Status is “Statement Processed with Default” or “Statement Processed without the default,” the employer can submit the request for downloading Form 16
- Click on the “Downloads” Tab and under it click on Form 16
- An employer can request for Form 16 through “Search PAN” download or “Bulk PAN” downloads option
- Click on “Submit” to proceed further
- After submission of the request, two Request numbers will be generated for Form 16 (Part A & Part B) that can be used to track the status of the request. Form 16 can be downloaded once if the status is “Available.” In case the status of the request is in “Submitted” status, the deductor should wait for at least 24 hours, to download Form 16
- Go to the “Requested Download” tab, the status of Form 16 can be checked by using the request number
- Form 16 can be downloaded by using the “HTTP download” option. The Statuses for the submitted request for Form 16 can be either of the following:
- Submitted: It implies that the request is successfully submitted, and the request is under processing
- Available: It implies that Form 16 can be downloaded
- Disabled: It implies that duplicate request has been submitted
- Failed: In this case, deductor should contact CPC (TDS)
- Not Available: The status shows as “Not Available” either because all PAN numbers mentioned in the statement are invalid or no records are available for the deductee
- The Part A of the Form can be downloaded using the Form 16 PDF Converter Utility 1.4 Lakh
- The Part B of the Form can be downloaded using the Form 16 PDF Converter Utility 1.1 Lakh
Form 16 Format
In April 2019, CBDT (Central Board of Direct Taxes) had introduced a new format for Form 16, which requires a detailed break-up of tax-exempt allowances paid to the employee and all the tax concessions claimed by the employee. In the earlier format, consolidated figures were needed to be given by employers.
The new format enables the IT Department to get to know the detailed break-up of the income and tax concessions claimed by a salaried individual. Hence, any discrepancies between the details in Form 16 and Income Tax Return can be highlighted.
The new format came to effect on May 12, 2019. Hence, the employers now have to issue Form 16 in the new format. There are some more changes in Form 16. The following table shows the details of all the changes introduced in the new format of Form 16
|S. No.||Changes Introduced|
|1||Detailed break-up of the exempt allowances|
|2||Detailed break-up of all the tax concessions availed by the employee|
|3||Income from the previous employer to be reported to the current employer|
|4||Standard Deduction announced as per 2018 Budget|
|5||Any Other Income Declared by Employee to Employer Other Than Salary Income|
The introduction of a new format is a good move by the Income Tax department as it enables the department to cross the information in Form 16.
Ans: A Salaried individual can obtain form 16 from his or her employer. If a person leaves his employment during the Financial Year, His or her past employer will issue Form 16 certifying the tax deducted on the employee’s Salary Income.
Ans: A person can file his or her ITR even if Form 16 has not been issued, based on Form 26 AS by logging on the E-filing portal. Form 26 AS provides the details of tax deducted at source during the Financial Year on all types of income.
Q: Is the employer required to issue Form 16 when no tax has been deducted on the Salary Income of the Individual?Ans: No, Form 16 is only required to be issued in case the employee has taxable income has the employer has deducted tax.
Q: Is a person required to file Income Tax return in case he or she has taxable income, but no tax has been deducted on Salary Income, and No Form 16 has been issued?Ans: The responsibility of deducting tax on salary and issuing Form 16 to the employee is of the employer and responsibility of filing Income Tax return is of the employee. In case the employer has deducted the tax even if the employee has taxable income or if the employee has other sources of income and his or her total income exceeds the taxable amount, he or she is liable to pay the income tax.
Ans: The employer is required to issue Form 16 to the employee by June 15 of the next financial year.
Ans: In this case, Form 16 is issued by the bank through which the pensioner is receiving his or her pension.
Ans: No, only an employer can download Form 16 to be issued to an employee.
Ans: Any person can get Form 16 can get his or her Form 16 about previous financial years from his or her employer. But in case the employee is not able to get the Form 16 for the last fiscal years, he or she can download the Form 26 AS for the last financial years which contains details of all the tax deducted at source from all sources of income.
Ans: The new format of Form 16 is applicable from May 2019 and requires a detailed break-up of exempt allowances and tax concessions claimed by the employee. The structure only required consolidated details.
Q: Is Form 16, conclusive proof that the employer has deducted the tax from the salary of the employee and deposited it with the government?Ans: Yes, Form 16 is conclusive proof that tax has deducted, and the government has received it.
Ans: While downloading Part A & Part B of Form 16 from the TRACES website, there is an option to sign these documents digitally.
Ans: The password for opening the file is the TAN of the employer in capital letters.
Ans: Yes, in case the employee has lost Original Form 16, the employer must issue the duplicate Form 16.