Salaried Individuals

What is Form 16?

Every year your employer will issue this document. It is a certificate under section 203 of the Income-Tax Act, 1961, which gives information on the tax deducted at source (TDS) from income chargeable under the head “salaries”. Simply put, it gives details of the tax deducted by the employer. If you have not received your Form 16, you can use the worksheet that the income tax (I-T) department provides to calculate and declare the amount 

What’s inside it?

Understanding the content of Form 16 helps you file your I-T returns; you may be able to do it yourself, without help from a chartered accountant or a financial planner, especially if your income comes entirely from your salary, and you have no other source of income.

Form 16 has two sections—part A and part B.

Part A consists of your personal details such as your name and address, your employer’s name and address, Permanent Account Number (PAN) of both, the employer’s Tax Deduction Account Number (TAN), and others. These details help the I-T department track the flow of money from your and your employer’s accounts.

Part A also gives details such as the assessment year (AY)—the year in which your tax liability is calculated for the income earned the previous year. For example, for income earned between 1 April 2016 and 31 March 2017, AY will be 2017-18. This year’s Form 16 will show 2017-18.

This portion of the form also gives details of your period of employment with the current employer. For instance, if in the last financial year, you have worked from 1 April 2016 to 31 March 2017, it will be mentioned in the form.

Next, it gives a summary of the TDS by the employer on behalf of the employee. This is the amount that the employer deducts from your salary as tax periodically and credits it to the I-T department. For instance, if every month your employer deducts Rs.3,000 as tax from your salary, it will be shown in the Form 16 as deposited by your employer to the government. The summary space will be divided based on the periodicity of how your employer credits the tax to the I-T department.