Form 16 (or salary certificate in layman’s language) is a certificate issued by an employer to all employees for a particular financial year. It is issued at the end of said year reflecting the total salary paid and amount of tax deducted (‘TDS’) during the year. For a salaried employee, form 16 is of utmost importance from the income-tax point of view as it is the base of his / her income-tax return.
The objective of this article is to attract the attention of all those salaried employees who have been issued or are yet to receive their Form 16 for the financial year (‘FY’) 2019-20.
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The following points are noteworthy in this respect:
Contents of your Form 16 – Part A
Part A of your Form 16 will be the TDS certificate issued by your employer. It determines the total amount paid to you during the year and the amount of tax deducted and deposited by the employer in your name with the Indian Government Treasury.
Note that if you change your job in one financial year, every employer will issue a separate Part A of Form 16, for the period of employment. This certificate is valid only if it reflects all these following details:
– Heading: Certificate under Section 203 of the Income Tax Act, 1961 for tax deducted at source on salary
– Certificate number
– Your name and address and also that of your employer
– Your Permanent Account Number (‘PAN’) and that of your employer
– Tax Deduction Number (‘TAN’) of your employer
– The range of Commissioner of Income Tax (TDS) [CIT(TDS)’]
– Assessment Year (AY 2019-20 in this year’s certificate)
– The period for which the certificate belongs to (April 1, 2019 to March 31, 2020 in this certificate)
– Quarter-wise details of the amount paid to you, receipt numbers of the quarterly TDS returns filed by your employer, TDS amount deducted and deposited by your employer in your name
– BSR code of the bank branch, date on which TDS was deposited, Challan serial number relating to each amount of tax deposited by your employer
– Status of matching with Oltas – it should reflect as ‘F’ (indicating final). In case it reflects ‘U’ (indicating unmatched), immediately inform the employer of the same else appropriate credit shall not be available to you
– Verification details of the employer
– All the pages of Part A of Form 16 should have been digitally signed by the employer. If not digitally signed, the same should have been at least manually signed by the employer.
Contents of your Form 16 – Part B
Part B of Form 16 is usually Annexure to Part A. It reflects your detailed salary components, taxability of the same and the total amount of tax payable by you for the year against which TDS has been deducted and deposited by your employer. The salary must be broken down, with details of deductions made by the employee under section 80C. The deductions that can be made under this section is EPF, NSC, Life insurance premiums, PPF, etc. If in one financial assessment year employee has changed jobs then the employee needs to be provided Form 16 of both companies.
The contents of Part B are as under:
– Gross Salary
– Exempted allowances under Section 10 of the Income Tax Act – conveyance allowance, house rent allowance, medical allowance, children education and hostel expenditure allowance, etc
– Deductions allowable from the salary income – entertainment allowance and professional tax
– Total income chargeable under the head ‘Salaries’ based on the above figures
– Your any other taxable income, provided it is reported by you to the employer
– Tax saving deductions that you are eligible for like PPF, LIC, Mediclaim, interest on education loan, etc, provided the same are reported by you to the employer
– Tax on total income payable by you – This shall be the amount of TDS that the employer would have deducted from your salary. However, it is possible excess or short TDS may have been deducted by your employer. In such a case, the excess amount should be claimed by you while filing your return, whereas short amount should be paid by you at the time of filing the return
– Verification details of the employer
– Digital / manual signature of the employer
Check out how to fill Form 16 here.
Form 12BA
Form 12BA is a statement showing particulars of perquisites, other fringe benefits or amenities and profits in lieu of salary thereof granted by your employer to you during the year.
Perquisites (or perks) are additional monetary / non-monetary benefits that you may have been granted throughout the year like rent free accommodation, interest free or concessional loans, etc. Profits in lieu of salary means any payment due to or received by you from your employer in connection with or at the time of termination of employment or modification in terms and conditions relating thereto like gratuity, pension, etc.
The form also confirms the amount of tax deducted from your salary and paid into the Government Treasury by your employer. The statement should also contain a declaration from the employer that the figures stated in the form are correct and accurate as per their books of accounts.
Employers issue Form 12BA along with Form 16 which is a tax deducted at source certificate and hence, follows due date applicable for issuance of Form 16 i.e., 15th June of immediately following financial year.
Annexure (salary details)
The last part of Form 16 consists of an Annexure that provides summarized salary details for your reference purposes bifurcating the same into exempt and taxable components. The Annexure provides details in the following tabular manner:
| Description |
Amount paid |
Amount exempt |
Amount taxable |
| Basic Salary |
|
|
|
| House Rent Allowance |
|
|
|
| …… (other components) …… |
|
|
|
| Total |
|
|
|
Lastly, it determines the total tax payable by you, tax deducted and deposited by the employer and net tax payable by/ refundable to you. Ideally, it should be Nil. In case the figure reflects a refundable amount (represented by a negative sign), it does not mean that the employer is going to refund you the amount, so don’t catch them for this purpose. The said excess amount is to be claimed by you in your return of income. Similarly, in case of payable situation you are required to pay the balance tax amount while filing your return of income.
Considering the above, listed below are some FAQs on the discussed matter for your further assistance:
a) On what basis is your Form 16 prepared?
Your Form 16 is prepared on the basis of your CTC and declarations that you submit before your employer with respect to your other income and/ or tax saving investments.
b) When should you receive your Form 16?
You should receive your Form 16 latest by May 31 of the subsequent year. For eg. Form 16 for FY 2019-20 should be received the latest by May 31, 2020
c) Is your tax-return replica of your Form 16?
You don’t have to just copy paste stuff from your Form 16 into your tax return. If you have earned any income during the year which has not been reported to your employer (eg. bank interest), certainly the same will not be reflected in your Form 16 but should form a part of your tax return. Similarly, you may have made certain tax saving investments at the end of the year (in March) which would not be reflected in your Form 16. Benefit of the same can be availed in the tax return even if not reflected in your Form 16.
d) Is there a need to submit your Form 16 at any point of time along with your tax return?
No, unless your case has been selected for scrutiny, in which case it will be required to be produced before the tax officer.
e) Can you confirm the amount of TDS deposited by your employer in your name?
Yes by checking your Form 26AS available on the website www.incometaxindiaefiling.gov.in.
f) What will the Gross Salary figure of your Form 16 represent?
It will denote your total CTC (excluding employer’s contribution to provident fund, if any) plus perquisite value and profit in lieu of salary as explained above.
g) What are the details required from Form 16 while filing my return?
Here is where you will be able to locate certain information for filing your annual return.
- Taxable Salary
- Breakup of Section 80C Deductions
- Aggregate of Section 80C Deductions(Gross & Deductible Amount)
- TDS (Tax Deducted at Source)
- Tax Payable or Refund Due
Additional information, which you will require from your Form 16 while filing your annual return are:
- TDS Deducted by Employer
- TAN of Employer
- PAN of Employer
- Name and Address of Employer
- Current Assessment Year
- Your (Taxpayer’s) Name and Address
- Your PAN
Hope the above helps every salaried employee in understanding how their Form 16 should appear and be smart enough to get it replaced in case of any discrepancy. Questions and comments are always invited.
- Prince Doshi
(Prince Doshi is a qualified Chartered Accountant and a B.Com graduate from Narsee Monjee College of Commerce and Economics. He has post qualification experience working as an Associate for BMR & Associates, a leading tax consultancy firm. Presently, he has his own Chartered Accountancy practice specializing in the field of income tax consultancy, sales tax, service tax and audit compliance.)
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