ASHISH BHALLA DEMYSTIFIES THE CONCEPT OF FORM 16
Form 16 refers to the certificate which is issued by the employer to a salaried individual whenever tax gets deducted from his salary. In other words, it is an acknowledgement stating that the tax deducted has been deposited with the Exchequer of the income tax department. This extremely important document is issued in accordance with Income Tax Act 1961 and the form contains all the necessary details pertaining to tax deducted at source and breakup of salary for a particular financial year. In case, if you think that filling up Form 16 can be a cumbersome affair, then it’s time to reconsider your thought. Today, Ashish Bhalla shall simplify the entire concept of Form 16 so that you can proceed with the same in a hassle-free manner.
• Form 16 can only be issued by an employer holding TAN number and deducting tax on the employee’s salary. Ashish Bhalla adds that your employer might refuse to issue you Form 16 if tax is not being deducted by him.
• Form 16 needs to be issued prior to 31st May of the respective year. Thus, for financial year 2017–18, the Form 16 needs to be issued within 31st May 2018. The employer becomes liable to pay a penalty of 100 INR per day till the default is cleared if he delays or fails to issue Form 16 within the stipulated time period.
• Part A of Form 16 comprises of TAN (Tax deduction & Collection Account Number) and PAN (Permanent Account Number) of both the employee and the employer. It also mentions other details such as name and address of both employee and the employer, relevant assessment year, time spent in employment under a particular employer as well as a detailed summary of TDS deductions from the monthly salary. Details like BSR code of the bank branch which is being used for making all payments and challan number is also included for reference purposes. All such information has an extremely important role to play while standing as a proof of tax deducted and deposited in the government account.
• You can check your total taxable income at a glance from Part B of Form 16. Leave travel allowance, house rent allowance, attire allowance, conveyance allowance, medical allowance are some examples of exemption from salaries. Amount of all these allowances are listed down in detail in Part B of Form 16 for deriving the salary chargeable to tax. Deductions are claimed under section 80C in the form of EPF, NSC, PPF, SukanyaSamridhhi, home loan principal repayments, Life Insurance premium, children’s tuition fees and donations towards charity. Ashish Bhalla also draws our attention to Section 80D containing details of other deductions on medical insurance. Once these amounts are deducted, we can compute the net income chargeable to tax.
According to Ashish Bhalla, a tax is calculated in terms of applicable tax slabs on this amount. Rebate is also given wherever applicable. The final tax payable in a particular year is derived once surcharge and cess have been applied.
• Ashish Bhalla points out that every salaried individual falling the taxable bracket laid down by Indian Income Tax Act 1961 is liable to fill up Form 16. The document which is commonly known as salary certificate shall be provided by the employer. You can also download the same in a PDF version from the website of Income Tax department.
• Form 16 once properly filled contains a clear representation of your total earnings in a particular financial fiscal along with tax which has been deducted from the same. This document becomes imperative whenever you try to avail any form of loan to serve as a potent proof for initializing the verification process.
People often end up confusing between Form 16 and 16A. While the former pertains only to salary income, the latter is concerned with TDS to be levied on income other than salary. Thus, form 16A is issued when TDS is deducted by the bank on your fixed deposits, rent receipts or insurance commission. It contains information regarding the address and name of both the deductor and the deductee as well as challan details of TDS deposited and PAN/TAN details. It also contains details regarding income earned and TDS deducted and deposited on the same. Details which needs to be filled in Form 16A can be retrieved easily from Form 26AS which can be utilised for filing return. This is however not same in the case of Form 16 where only details pertaining to TDS deducted by employer is availed from Form 26AS.
Form 16 can be verified online by logging on the website of TDS Centralised Processing Cell and clicking on ‘Tax Payer’ followed by ‘Verify TDS Certificate’ option.
