Understanding Form 16 and other TAX related forms


Form 16 and other Tax-related forms (Form 16A & Form 26AS)

If you’re a salaried person, I’m sure you’ve received your Form 16 at the moment. This document is provided by employers each year. It is very important to understand the details provided on Form 16. Understanding the contents of Form 16 helps you present your T-T easily.

So, what is Form 16?

It is a certificate under section 203 of the Income Tax Law, 1961, which provides information on the tax deducted at the source (TDS) of the income attributable to the main “salaries“. Give details of the tax deducted by your employer. In simple terms, Form 16 is the “Salary/income certificate” issued by your employer.

In this post, let’s understand: What are the different sections on Form 16? What is the difference between Form 16 and Form 16A? What is the link between Form 16 and Form 26 AS? How to verify if TDS is deposited or not? How to use Form 16 to file your income tax returns?

Form 16 – Details & Sections

Form 16 is a user-friendly document. It has two episodes, ‘PART A’ & ‘PART B’.

Details of Part A of form 16 are –

  1. Employer’s name & address
  2. Employee’s name & address
  3. PAN no and TAN no (tax deduction account number) of your employer (Deductor)
  4. PAN details of employee
  5. Assessment Year (the year in which your tax liability is calculated for the income earned in the previous year. If financial Year or previous year is 2014-15, assessment year would be 2015-16).
  6. Part A provides the summary of TDS deductions. (This summary can be quarterly / monthly or based on the periodicity of how your employer deducts the TDS and credits the tax to the IT department)
  7. This section also gives you details about the ‘period of employment’. (If you have worked for two or more companies in a financial year, you will have multiple form 16s).

Part B of Form no 16 has below details:-

Chargeable income under the head of ‘Salary’. (Includes salary – Assignments and deductions (such as LTA / HRA / professional tax, etc.).

  • Gross income is the wage income + any other income reported by you. (Other income can be negative income, that is, loss of home ownership or capital gains, etc.)
  • Below, deductions are provided under Sections 80c / 80 CCC / 80 CCD. (The maximum limit is Rs 1.5 Lakh)

  • The deductions are then provided in other sections, such as 80D (health insurance premium), 80E (interest on education loans), 80G (donations) and others. (You would have submitted investment evidence to claim tax deductions from your employer, these tax deductions are listed here).

  • The totals of the qualifying deductions (Aggregate of the deductible amounts under Chapter VI A: Item 10) are reduced from your Gross Income (Item 8) to arrive at the ‘Taxable Income’ (item 11). The tax is calculated (Item 12) in this amount based on your tax slab.

  • If your employer deducts the TDS, this amount is subtracted from your total tax liability. The net amount of the tax can be zero (or) some amount of tax payable (or) reimbursement. (The balance, if negative, is the amount of your refund).

If your Salary income is more than the basic exemption limit (Rs 2.5 Lakh for the 2014-15 fiscal year), your employer must deduct TDS from your Salary and deposit it with the Government.

                                                        (Download Sample Form-16)

Form 16 Vs Form 16A

Form 16 is your Salary Certificate or TDS certificate issued by your employer. Form 16 A is also a TDS certificate that is usually issued a quarterly. While Form 16 is for salary income only, Form 16A is applicable to TDS in Non-Salary Income. (Form 16A is a statement that contains all the TDS details deducted from all payments, except salary).

Example: Form 16A is issued by banks when they deduct TDS on interest income accrued in their fixed deposits / recurring deposits.

Allow me to provide you with a sample form 16A. I received the following form 16 A from Standard Chartered Bank. In one of my FDs, I received a loan of Rs 1,188 as interest income and in it, Rs 118.80 was deducted as TDS (@ 10%). (Remember, if you are at a different income tax rate, say @ 20%, you must include this interest income and pay the corresponding taxes)

                                                        (Download Sample Form-16A)

What is Form 26AS? How to verify or verify if the TDS deductions are deposited in the IT department?)

Form 26A gives you all Tax Credits details. It is a form that shows that the tax deducted has also been deposited with the Govt.

(If there are inconsistencies, the IT department will only consider the TDS figures in accordance with Form 26AS. You need to contact the TDS recipient to remedy any errors. For example- If your employer has updated your PAN in Inaccurate, the TDS deduction will not be reflected in your 26AS Form. In this case, you need to remove this error from your employer.)

To use an AS 26 Form, you must visit the Income Tax Website and click View Form 26AS. You must enter your log to access this form. You can then download a form-26AS statement of the relevant financial year. (Form 26AS is provided by TRACES – TDS Analysis and Analysis Consistency Analysis)

You can also find details of your tax payment in Form 26 AS. Details of tax refund received during the financial year are also available in this form.