Form-16 for Employees

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!

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