Chartered Accountants in Delhi

Form 16- Income Tax

Form 16 is the format that an employer should use to issue an acknowledgment of TDS deducted from an employee’s salary. Any person who is responsible for deducting tax at source (TDS) from an employee’s salary is obligated to provide the employee with this form in the prescribed format. This article examines Form 16 as defined by the Income Tax Act.

TDS Certificates

TDS certificates are issued by those who deduct tax at the source (TDS). When deducting tax, the person who deducted tax is obligated to submit a certificate to the employee or payee in the prescribed manner. The format suggested varies depending on the situations, as listed below:

  • For TDS on salary, Form 16 is issued.
  • Form 12BA is a statement of the fair market value of perquisites and profit in lieu of wages.
  • TDS on other income is reported on Form 16A.
  • TDS on the purchase of immovable property is calculated using Form 16B.

Form 16 format

 Form 16 must be issued in the manner prescribed by the Income Tax Act. Form 16 includes the following information:

  • The deductee’s valid permanent account number
  • The deductor’s valid tax deduction and collection account number (TAN)
  • In the case of a government office, book identification numbers or numbers where the deposit of tax deducted is made without the production of a challan.
  • In the case of bank payment, the challan identifying numbers or numbers.
  • The receipt number of the applicable quarterly statement of tax deducted at source is provided in line with Rule 31A.
  • Receipt numbers for all applicable quarterly statements, if the statement is for TDS on income chargeable under the heading “Salaries.”

Part A of Form 16

Part A of Form 16 must be issued by all tax deductors by producing and downloading the document using the TRACES site. As a result, all tax deductors and employers must have a TRACES account in order to deduct tax on salary. Also, if an assessee works for more than one employer in a year, each of the employers can provide Part A of Form 16 for the period worked, and Part B can be issued by each of the employers or the last employer at the assessee’s discretion.

Summary:

Form 16 is simply a certificate given to employees by their employers. It certifies that TDS was deducted and deposited on behalf of the employee with the government authorities. It provides a full breakdown of the employee’s salary and the TDS deducted.

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