What is Form 16?

Form16 is the certificate issued under section 203 of the Income tax Act for tax deducted at source (TDS) from income under the head 'salary'. It is issued on deduction of tax by the employer from an employee's salary and deposit of the same with the government. The certificate provides a detailed summary of the amount paid or credited to the employee and the TDS on the same. This form is issued annually in accordance with the provisions of the Income Tax Act normally after the end of the financial year for which it is issued. It is compulsory for the employer to issue the certificate to the taxpayer.

Form 16 consist of two parts, Part A and Part B


PART A OF FORM 16

The Part A gives the summary of tax collected by the organization or employer from the salary income, on the employee’s behalf and deposited in the government’s account. It is a certification duly signed by the employer that they have deducted the TDS from the employee’s salary and deposited it with the income tax department.

It contains the following details

  • The time period for which the individual was employed with the employer in the concerned Financial Year
  • The Assessment Year
  • Personal information of the employer as well as the employee. 
  • Summary of the salary paid
  • Date of tax deduction from the salary
  • Date of tax deposit in the account of government
  • Summary of tax deducted & deposited quarterly with the Income Tax Department
  • Acknowledgment Number of the TDS Payment


PART B OF FORM 16

Part B is a consolidated statement covering details regarding salary paid, any other income as disclosed by the employee to his/her organization, amount of tax paid and tax due, if any.

  • Total Salary Received: Salary structure is further broken down into various components such as House Rent Allowance, Leave Travel Allowance, Leave Encashment, Gratuity and others.
  • Exemptions Allowed: As per Sec (10) of Income Tax Act, 1961 such as allowances given to employees for Conveyance, Housing rent (HRA), Children education and hostel expenditure, medical, etc. are also mentioned in the form.
  • Gross Income: This is the sum of the salary income as received from the employer and any other income declared by the employee such as income earned from house/property etc. 
  • Deductions From Salary: Under Chapter VIA. Deductions under other sections such as 80D

    Net Taxable Salary
    : Total deductions are aggregated under “Chapter IV-A” and reduced from the gross income to calculate the taxable income. Your tax liability is calculated on this amount.

Multiple Form 16: If you have changed your jobs during the financial year, it is advisable to submit your income from previous employment to your new employer. In addition to this, submit all your investments, house rent etc., details to your current employer.

If you do so, the form 16 which is released by your new employer can have all the required details and TDS will be deducted accordingly. Do note that you need to enter the TDS deducted by your current as well as previous employer in your ITR, and pay taxes (if any) accordingly,

In case if you have not shared the details, you can file your Tax returns online based on multiple Form 16s. You need to consider both the incomes together and pay taxes accordingly.