Understanding Income Tax Form 16

Form 16 is a TDS certificate issued to you by your employer, which contains a detailed record of the income earned as salary and taxes paid on it, in a financial year. It serves as a proof that the employer has deducted TDS from your salary and deposited with the I-T Department.

Read this guide by H&R Block to learn about Form 16 to file your tax return easily and accurately.

What is the use of Form 16?

1. Income Tax Return – As a salaried individual, Form 16 is one of the most important documents you need while filing your income tax return. Keep it handy to make your e-filing process easy and accurate.
2. Verification of TDS Deducted and Deposited – You can check if TDS from your salary has been deducted and deposited with the government by comparing your Form 16 with your Form 26AS.
3. Visa Processing– Foreign embassies may request for your ITR-V to issue you a visa. To strengthen your application, Form 16 may also be required, as it contains additional details about your nature of employment and employer.
4. Loan Application– Banks and other financial institutions ask for your income proof like bank account statements and ITR, when you apply for a loan. They do not specifically ask for your Form 16, but it can be useful as it contains a breakup of your salary and other investments, along with your tax liability, which aids in the assessment of your financial health.

[ Calculate Your Total Tax Liability ]

How to get Form 16?

For every financial year, you can get Form 16 only from your employer. It is a misconception that you can download Form 16 online by yourself from the TRACES website.

[ Read: Difference between Form 16 and 16A ]

When is Form 16 Issued by the Employer?

Generally, Form 16 for a financial year is issued by the end of May or beginning of June of the succeeding financial year. 15^th June is the last date for your employer to issue your Form 16.

Understanding Form 16 Format

There are two separate parts in Form 16- Part A and Part B. Part A is the summary and proof of the TDS deducted from your income and submitted to the government. Part B is the breakup of your salary and tax liability.

Form 16 Part A

Part A of Form 16 contains quarter wise details of tax deducted and deposited with the government. Your employer gets Part A from the TRACES portal (1) after depositing your TDS with the government and filing the TDS returns. You are issued the form only after your employer verifies the information in it.

Following are the components of Part A:

1. Name and address of employer (deductor)
2. Name and address of employee (deductee)
3. PAN of deductor
4. TAN of deductor
5. PAN of deductee
6. Assessment year (the assessment year in which you are filing the return for the taxes deducted by your employer)
7. Period of employment with the employer
8. Summary of amount paid/ credited, and tax deducted at source thereon in respect of the employee

SIDENOTE: If you change your job in a financial year, each employer will issue a separate Part A of Form 16 to you for the period of employment.

[ Read: Form 16A of Income Tax ]

Form 16 Part B

Part B of Form 16 is generated internally by your employer. It acts as the annexure to Part A, with details of your salary and other income, along with details of the allowances, deductions and exemptions applied, to calculate your total tax liability.

Following are the components of Part B:

1. Detailed breakup of salary including exemptions
2. Deductions under section 16
3. Income (or admissible loss) from house property reported by employee offered for TDS
4. Income under the head “Other Sources” offered for TDS
5. Deductions applied under Chapter VI-A
6. Relief u/s 89
7. Net tax payable/ refundable

SIDENOTE: If you change your job in a financial year, it is your choice whether to get Part B of Form 16 from each employer or just your previous employer.

[ Read: How to file your return with Multiple Form 16 ]

Recent Changes to Form 16 for FY 2018-19 (AY 2019-20)

The Central Board of Direct Taxes (CBDT) has made changes to Form 16. There is a new format for it, which will be applicable from May 12, 2019. Your employer will issue your Form 16 for FY 2018-19 using this format. Therefore, it is essential that you understand the following changes to file your ITR:

• The new Form 16 makes it mandatory for your employer to report the details of all the exemptions claimed under section 10. Earlier, the employers used separate formats where they may or may not choose to report the break-up of allowances which are exempt.
• Earlier, you had the option to disclose income from any type of source and request for TDS deduction from your employer. However, in the new Form 16, you can only disclose income (or loss) from house property and other income offered to you for TDS. Tax on any other income such as income from capital gains, business, profession, etc. must be paid directly to the ITD.
• There is a new standard deduction of Rs 40,000 which must be reported in the new Form 16.

SIDENOTE:  Along with Form 16, the CBDT has revised Form 24Q to make sure that the TDS return format aligns with the new ITR format. For example, your employer will now have to declare a break up of the deductions u/s 80C instead of an aggregate number in the TDS return.

How to generate Form 16?

If you are an employer, Part A of Form 16 must be generated and downloaded from the TRACES website. However, Part B needs to be manually generated by you. Moreover, you must merge Part A and Part B of the form before issuing it to your employees.

H&R Block’s Form 16 Generator tool will help you generate Form 16 in a fast and efficient way. You can easily generate Part B, merge Part A and Part B and digitally sign the form for all your employees, free of cost.

Form 16 Eligibility Salary

If your total income is below the basic exemption limit of Rs 2,50,000 and TDS is not deducted from your salary, your employer may or may not issue Form 16 Part A. However, it is mandatory for him to issue Form 16 Part B to you.

If your total income is above the basic exemption limit and TDS is deducted from your salary, your employer must issue Part A as well as Part B of Form 16 to you.

How to file Income Tax Return with Form 16?

If your income exceeds the basic exemption limit, you must file your ITR. To ensure that there are no errors in your income tax return, you must verify that the amount of tax deducted and deposited as per your Form 16 matches with the figures in your Form 26AS.

[ Read: Income Tax Slab in India ]

E-Filing of your income tax returns is preferred over offline return filing, as it is quicker, easier and more convenient. Register yourself on H&R Block’s online tax filing platform which offers a hassle-free income tax e-filing experience!

How to file Income Tax Return without Form 16

To file your income tax return without Form 16, you will need the following documents:

• Payslips
• Form 26AS
• Rent Receipts
• Investment Proofs
• Other relevant documents

You must manually enter your salary and investment details by referring to the above documents, while filing your ITR without Form 16.

To ensure an accurate e-filing of your return, register yourself with H&R Block, and a dedicated tax expert will prepare and file your income tax return online while getting you maximum tax benefits!

What if the employer does not issue Form 16?

If the employer does not issue Form-16 then you may refer to your Form 26AS. This form contains details of tax deducted from your payments and deposited in the government account. If, however you cannot access this or it does not reflect any TDS payments then you must demand your Form 16 from your employer. It is your right to do so.

Form 16 Password Format

Your Form 16 is password protected. Therefore, to access it you must get the password from your employer, as it differs from company to company.

People Also Ask

Q. How do I download Form 16?

A. You cannot download your Form 16, as it is issued only by your employer.

Q. How to get Form 16 for pensioners?

A. Pension income is taxed as salary income, under Income Tax rules. Form 16 will be issued to you if you are a pensioner and your pension income is above the basic exemption limit.

Q. Where to upload Form 16?

A. To file your income tax return accurately, upload your Form 16 to H&R Block’s e-filing portal.

Q. What is the difference between Form 26AS and Form 16?

A. Form 16 contains details of your salary and the TDS deducted on it, whereas, Form 26AS contains details of tax deducted on all sources of income. Although both Form 16 as well as Form 26AS are generated by the I-T department, the former is issued by your employer, while you can personally download the latter from the TRACES portal.

Q. Can I get a home loan without Form 16?

A. Form 16 and income tax returns indicate to the lender that you are employed and have a stable source of income. If you submit your income tax returns, you may get a home loan without a Form 16.

Q. How to find TDS certificate number on Form 16?

A. The 7-character TDS certificate number is located at the top left corner of Form 16 Part A.

Q. What is 80D (1) and 80D (3) in Form 16?

A. Under section 80D(1) of the Income Tax Act, 1961, if health insurance premia and expenses of preventive health check-ups are paid from the taxable income of an individual or HUF, the amount can be deducted from the total taxable income.

Section 80D(3) specifies the type and amount of expenses which can be claimed by HUF as a deduction.

Q. How to file ITR with multiple Form 16?

A. If you have changed jobs in a single financial year, you may receive one Form 16 from each of your employers. You must file your ITR by taking into consideration income from every job. However, you can apply the basic exemption limit and deductions only once.

With the introduction of the new Form 16, there is now a uniformity in the format of Form 16, unlike earlier. This will help the government track individuals who try to evade tax with false claims.

Therefore, it is your responsibility to ensure that you maintain all the proofs of your investments, as all the deductions you are eligible to claim will not appear in the new Form 16.

Related Articles:

• How to file Income Tax Return online?
• Which ITR form to file?
• Documents required to file Income Tax Return
• List of Exemptions under Section 10 of Income Tax Act
• How to check your Income Tax refund status?