The tax season is
approaching and employers will soon start giving out the most important tax
document to their employees – FORM 16. For the many who have never filed an IT return, it’s the first season of tax filing. In such case it becomes extremely
important to understand all the major aspects of filing a tax return. FORM 16
is one such essential document that one must understand. Many who have filed
ITR previously also may have minimal understanding of Form 16 and want to learn
more. In this article we will help you understand contents and structure of
Form 16.
Income Tax Act defines
Form 16 as a document issued to salaried individuals by their employers. It
contains details of salary paid, investments made, deductions claimed under the
IT act and calculations of tax deducted at source.
From the perspective of
an employee Form 16 is a very important tax document since it is a proof of
salary received/ income earned and also tax deducted and paid to the government
account. The basic information a Form 16
includes is Name, Address & Permanent Account Number (PAN) of the Employee
& Name, address and PAN and Tax Deduction Account Number (TAN) of the
Employer.
There
are two parts to FORM 16 – Part A, which is a certificate by the income tax
authority which states that tax deducted, has been paid by the employer to the
government account and Part B, which is a salary statement that includes
details of employee’s income. Employee must ensure that Part A is downloaded
from the Income Tax website to ensure that the taxes are correctly paid. Form
16 is used as the basis to file taxes and hence one must ensure that this
document contains correct information.
Form 16 also reflects
the declarations made by the employee with respect to tax saving investments
made and reporting of any other income apart from salary. Typically the
computation of total income as shown in FORM 16 contains income from salary,
income from house property and income from other sources (mostly interest
income from banks). The form contains investment details as per proofs
submitted by the employee and hence shows the resultant amounts claimed as tax
deductions. The tax deductions should be checked by the employee for accuracy. If
there are any unclaimed deductions for which declaration and proofs couldn’t be
submitted to the employer then these may be claimed later while filing ITR. This
helps claim refunds from IT department for excess taxes deducted as per FORM
16.
Hence Form 16 is a very
important document that contains a lot of details of income and taxes of an
employee. Preserving it and maintaining its confidentiality
is of utmost importance!
H&RBlock India strives to blend tax
expertise with a strong focus on continually improving the client experience to
provide all its clients with an unparalleled value proposition for filing their IncomeTax Online.
