Form 16

Introduction

Form 16 is provided by the employer to the employee; it contains the details of the amount of tax deducted at source (TDS) from an employee’s salary. It is majorly required by the employees at the date of depositing ITR with the IT department. It is a mandate for the employer to provided at the end of every financial year to taxpayers’ employees under Section 203 of the IT act.

It comprises the complete details about the basic pay, the tax the employer deducted, and when it was submitted to the IT department. You should know that if you switch jobs and tax has been deducted at all the places, you should get a different Form 16 for each of them.

Components included in Form 16

Various elements that you will find in Form 16 are:

• Refunds or balance about taxes payable
• Employer’s TAN and PAN details
• Tax payment details
• Employee’s personal details
• Taxes deduction details as per section 191A
• Details about salary
• TDS receipt

Form 16 Part A

The following information will be included in the Form 16 Part A when the employer issues:

• Employer’s name and address
• Taxpayer’s name and address
• Employer’s PAN and TAN details
• Taxpayer’s PAN and Reference Number
• Period of employment and Financial year
• Total TDS deducted in the current year and deposited

Form 16 Part B

This form consists of the detailed bifurcation of the tax amount as per the investment declarations made by you at the start of the financial year and the proof of the documents submitted while filing the ITR. The various components that Form 16 B comprises are:

• Employees’ basic salary details
• Allowance’s details
• tax deduction details
• Any other income reported by the employee
• Deductions available against that income
• Employee’s net tax liability
• Employer’s verification

Difference between Form 16 A and Form 16 B

Form 16 A is the TDS certificate issued in place of income other than salary, constituting accruals from returns against fixed deposit investment, mutual funds, gold bonds, and other forms of capital gain. Form 16 B, on the other hand, certifies tax that has been deducted from income accruing from the sale of immovable property (building or a part of it and land).

Who is eligible for Form 16?

The Ministry of Finance’s guidelines stipulates that any salaried individual whose tax is deducted by the employer is eligible to get it. Issuing it is not mandatory for a company if an employee does not fall in the taxable category. But, various companies issue the form even to employees who don’t fall into the taxable bracket as it is a convenient way of providing consolidated information concerning employees’ total earnings.

Advantages of Form 16, Form 16 A, and Form 16 B

Form 16

• Provides information necessary to file personal income tax returns.
• It helps verify that the correct amount of tax has been paid.
• It is considered valid income proof when applying for loans and can be used in financial institutions.
• It allows employers to calculate a proper withholding tax for an employee.
• They are required to secure an international visa.

Form 16 A

• The TDS and income data contained in Form 16 A assist taxpayers in filing their income tax returns and calculating the tax as applicable per their income.

Form 16 B

• The form provides evidence that TDS has been deducted from the proceeds of a property sale by the buyer and duly deposited with the income tax department.

What are the steps for downloading Form 16, 16 A, and 16B?

Form 16

1. Step 1 – Go to Income Tax Department.
2. Step 2 – Use credentials to login into the website.
3. Step 3 – Scroll to the Downloads Tab. Choose the “Income Tax Forms” option.
4. Step 4 – There, you will see the option of Form 16, with two options – ‘PDF’ and ‘Fillable Form’.
5. Step 5 – To add an individual PAN to Form 16, click on the Financial Year dropdown, select the desired financial year from the list and enter the PAN in the field provided. Hit Enter when you are done.
6. Step 6 –  Finally, tap on Submit option and download Form 16.

Form 16 A

1. Step 1 – Login to the TRACES website with a user ID (PAN) and password.
2. Step 2 – Scroll to Downloads and click on Form 16 A.
3. Step 3 – Enter the details and click on Go.

Form 16 B

1. Step 1 – Log in to TRACES website.
2. Step 2 – Click on Register New User and complete the formalities.
3. Step 3 – Once the details are validated, an account will be created with the PAN user ID, and you can create a  password of your choice. An automatically generated email will be sent that will contain an activation link. The second code will be texted to your registered mobile phone number. To download Form 16 B, you need to scroll to download and click on the request for Form 16 B, validate the details and submit the request. After some time, click on download and save it to your computer.

Conclusion

The whole business of managing the HR function is quite complex for both employers and employees alike. There are so many details to take care of, especially taxation, that it becomes critical to take care of these things with extreme meticulousness. That is where Akrivia HCM steps in by making the entire employee service experience concerning payroll management flawless.

The digital revolution has changed every sector worldwide, which is equally valid for the HR function as well. This becomes even more important in today’s time when remote and hybrid working are on the buzz. Akrivia HCM offers the best payroll software in India that helps empower and enable one’s workforce in the best possible manner.

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