What is Income Tax Form 16: Everything Explained

Income Tax Form 16 is the tax deduction at source certificate  issued by the employer on an employee's behalf. It provides details of TCS/TDS for several transactions between deductors and deductees.

If you have switched jobs or worked with multiple employers in a financial year, your tax is likely to get deducted at multiple places. In that case, you will have to get an ITR Form 16 from them individually.

People searching for “what is form 16?” Firstly, one needs to understand why it is so important.

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Income Tax Form 16 acts as proof of timely tax payments. Therefore, as a taxpayer, you can file your Income Tax Returns easily with this certificate.

ITR Form 16 also contains information on how your tax was calculated depending on the investment declarations made at the beginning of that financial year. These declarations include company allowances, house rent, loans, medical bills, etc., that were claimed as deduction from your total income and help you file your Income Tax returns.

However, considering your overall net income in a financial year, your employer may or may not deduct any tax from your salary. So, before taking the necessary steps, you first need to know if you are eligible for ITR Form 16.

If you are a salaried person and your employer has deducted tax at source from your salary, you are eligible for Income Tax Form 16.

Your net annual income may fall above or under the tax exemption limit. But if your employer has made the tax deductions, he/she needs to issue an ITR Form 16.

In addition, your employer needs to issue ITR Form 16 on or before 31 May of the assessment year to give you ample time to file your ITR before the due date.

You can download Income Tax Form 16 in these simple steps.

• Go to the official website of the Income Tax Department.

• Next, go to ‘Forms/Download’ and click on ‘Income Tax Forms’.
• Here, you will find both the ‘PDF’ and ‘Fillable Form’ options.
• Click on ‘PDF’ if you want to download it.

If you want to fill it online, you can opt for any PDF editor available on the Internet.

This form applies to both salaried employees and pensioners. It contains two parts - Part A and Part B.

Part A consists of information regarding TDS deducted and deposited by the employer. It includes -

• TDS certificate number
• Name and address of the employer
• Name and address of the taxpayer
• PAN and TAN of employer
• PAN and  Employee Reference Number of taxpayer
• Financial year and period of employment
• Total TDS deducted at source

On the other hand, Part B of ITR Form 16 includes -

• Gross Salary
• Information on exempted allowances, according to Section 10
• Standard Deduction u/s16
• Income chargeable under the head Salaries
• Income from House Property
• Any Other Income
• Gross Total Income
• Details of Tax Saving Investments (deductions allowed as per Chapter VIA of the ITA)
• Total Taxable Income
• Tax on Total Income
• Rebate u/s 87A
• Surcharge wherever applicable
• Health and Education Cess
• Tax Payable
• Relief under the Section 89
• Net Tax Payable
• Verification by the employer

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After downloading and filling up ITR Form 16, you can verify it in these simple steps.

• Go to the official portal of TRACES.

• Click on ‘Proceed’ after entering the Captcha code.
• Fill in all the required details and click on ‘Validate’.

Besides the primary use of Form 16 as your ‘salary statement’, you can also use this certificate in several other scenarios.

• Proof of your income
• Checking all your tax-saving investments
• Filing Income Tax return
• Loan assessment and approval
• Documentation of your tax deductions
• Visa issuance
• Checking overpaid taxes
• Helping the next employer compute your tax liabilities

The annual Form 16 eligibility salary is ₹2,50,000. So, if your annual income for the assessment year is within ₹2,50,000, you are exempted from filing ITR Form 16.

If you are a taxpayer and want to save on taxes, you must file your tax returns mandatorily.

Online Process

You can visit the IT department’s e-filing portal to file your tax returns online. 

• Go to the Income Tax e-Filing portal https://www.incometax.gov.in/iec/foportal/

• Download the Appropriate ITR utility under 'Downloads > IT Return Preparation Software'.

• Extract the downloaded utility ZIP file and Open the Utility from the extracted folder. 

• Fill the applicable and mandatory fields of the ITR form.

• Validate all the tabs of the ITR form and Calculate the Tax.

• Generate and Save the XML.

• Login to e-Filing portal by entering user ID (PAN), Password, Captcha code and click 'Login'.

• Click on the 'e-File' menu and click 'Income Tax Return' link.

• On this return page all the necessary details will be auto-populated.

• Next step is verification. There are several options to verify your Income Tax Return including Aadhar OTP verification.

• EVC through Bank account, Demat account or Bank ATM as verification option, Enter the EVC received in the mobile number registered with Bank or Demat Account respectively.

• Other two verification options, the ITR will be submitted but the process of filing the ITRs is not complete until it is verified. The submitted ITR should be e-Verified later by using 'My Account > e-Verify Return' option or the signed ITR-V should be sent to CPC, Bengaluru.

• The ITR-V will be automatically sent to the provided email ID.

After successful submission, a link to e-verify the details will be displayed. Check it carefully and save it for future references.

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Offline Process

After downloading and filling in the necessary forms, submit them at your nearest ‘Aaykar Sampark Kendra’. You also need to fill in an acknowledgement form, which will be stamped and returned by the assessing officer.

In case your employer fails to issue an ITR Form 16 after having deducted TDS, the employer will have to pay ₹100 for every day the default continues.

That being said, here are the steps to file ITR without Form 16 -

• Firstly, determine the total income from all your sources.

• Then, find TDS deducted on income with the help of the consolidated Form 26AS from the TRACES website.

• Claim Deductions through investment declarations.
• After that, calculate your total taxable income and tax liability for the year. Next, file your IT return accordingly.

Now that you know the detailed process of getting Income Tax Form 16 and its benefits, ask your employer for the same. You can also download it yourself, as mentioned, to save extra tax payment.