Benefits of Form 16 TDS Certificate with Automated Form 16 for the Financial Year 2016-17 & Assessment Year 2017-18

Form 16 is a TDS Certificate issued by the employer deducting the TDS while making payment to an employee. As per the Income Tax Act, every employer at the time of payment of Salaries shall deduct TDS at the average rate of income tax computed on the basis of the Income Tax Slab Rates in force for that financial year in which the payment is made on the estimated income of the assessee.

The TDS so deducted by the employer is to be deposited with the Income Tax department and after depositing the same, the employer issues a TDS Certificate containing all particulars of the tax so deducted and deposited in Form 16. It is issued by the employer after the end of the year. As per the Income Tax (Sixth Amendment Rules), the last date for issuance of Form 16 by an employer to his employee is 31st May of the next year.

Only the TDS Deducted from Salary is reflected in this form and TDS Deductions from any other Income are reflected in Form 16A/ Form 16B.

Components of Form 16

Form 16 is a very simple and easy to understand form which states the Salary (and its related components) paid by an employer to his employee and the income tax deducted thereon.

On the basis of Form 16, a taxpayer can easily file his income tax return form without the help of a Chartered Accountant. There are various income tax return forms for different category of income earners. For taxpayers earning income from Salary and/or House Property and/or Capital Gains and/or Other Sources, they can file ITR 1/ ITR

Form 16 is divided into 2 parts: Part A & Part B.

PART A OF FORM 16

Part A of this type of TDS Certificate consists of details like:-

Name, PAN Card No. & Address of the Employee
Name, PAN No., Address & TAN No. of the Employer
The Assessment Year for which the TDS has been deducted.
Summary of Salary paid and the TDS deducted and deposited with the govt.
Acknowledgment No. of the TDS Payment deposited with Govt.

PART B OF FORM 16

§ Detailed Salary particulars like House Rent Allowance, Leave Travel Allowance, Leave Encashment, Gratuity, Pension, Deductions claimed like PPF, Tax Saving FD, National Saving Certificate etc

The Total Income and the Total Tax on Salaries thereon
Education Cess and Surcharge if any
Tax Deducted under section 192(1A)
Balance Tax payable/tax refundable

This TDS Certificate also contains a declaration at the end that the person deducting the tax has deposited the same with the Central Govt. This statement may either be manually signed or digitally signed. An extract of a specimen copy of Form 16 is shown below:-

Form 16 in case of Job Change

In case you have changed your job during the year, you are required to collect this form from both the previous employer as well as the new employer as you would be filing your Income Tax Returns on the basis of your Form 16.

When you join any new organization, you should furnish your TDS details from the previous employer to the new employer. You would also be required to furnish Form 12B to the new employer

Furnishing the TDS Details issued by the previous employer would help the current employer in deducting the tax accordingly. Although furnishing these details is not mandatory, if you do not mention these details to your current employer, then you are liable to yourself compute the total income from both the employers and calculate your tax liability accordingly. (Only applicable in the year of job change)