Does your employer deduct some amount out of your monthly pay?
Do you get a reference receipt or acknowledgement for such deduction?
One of the most important deductions for a salaried employee out of his total income receivable from his employer is TDS ( Tax Deducted at Source). Every employer paying salary to his/her employee while making payment of salary has to deduct a certain amount of tax as per Section 192, which he has to deposit to a notified account of tax department as advance tax based on the income slab rate applicable on employee.
On deduction of TDS, the employer issues a form/certificate as an acknowledgement of such deduction to the employee to help him avail refund of any excess TDS paid by the employer on behalf of employee. The certificate so issued to the employee is Form 16.
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What is Form 16?
Form 16 is an acknowledging certificate issued by an employer to an employee specifying details of various deductions made by the employer from salary of the employee and Tax Deducted at Source.
An employer is required to deduct a specific rate of TDS after the end of the financial year for which the TDS is to be deducted and before 15th June of the Assessment year.
Components of Form 16
Part A: Basic Details and TDS Deducted
Part B: Salary Breakup and Deductions availed.
Part A of Form 16
An employer using his registered TAN details can prepare and download Form 16 from the TRACES web portal located at ‘’https://www.tdscpc.gov.in/app/login.xhtml''.
Before issuing to the employee, an employer has to confirm the following details stated in
Part A of Form 16.
a) Name of employee
b) TAN and PAN of employer
c) PAN of employee
d) Summary of TDS deducted rate of TDS, deposit details as certified by the employer.
Part B of Form 16
a) Salary break up of employee
b) Exemptions and deductions available u/s 10
c) Other specific deductions u/s 16 , u/s 80, u/s 89
d) Total taxable income and rebates available u/s 87A
e) Net tax payable
- A TDS certificate issued by the employer to employee acknowledging TDS deducted and the salary breakup.
- TDS certificate issued by banks or other agencies on deducting TDS under various other TDS sections other than for Salary by an employer.
- Form that specifies that TDS has been duly deducted and deposited with government.
- Issued either on quarterly basis or annually.
- Generally issued on a quarterly basis
- Can be downloaded from Income tax department official web portal.
- TDS is deducted on an average rate of tax
- TDS is deducted on a rate specified by government as applicable on respective section.
Importance of Form 16 - Filling ITR for Salaried Employees
Form 16 is essentially necessary for filling IT return by salaried employees. It provides the following information to be sufficed while filling the required ITR form :
- Allowance and exemptions availed under Section 10
- Specific deductions availed under Section 16, Section 80, etc.
- Taxable Salary
- Other Incomes declared and offer for TDS deduction.
- Tax payable and refund to be claimed.
Things to Remember :
> In case the TDS certificate from the employee gets lost, he can request the employer to issue a duplicate copy of the same.
> Form 16 can be revised by the employer by filing a revised return for the same.
Recent Amendments :
A new format for Form 16 has been specified by CBDT via a notification dated 12th April 2019 which states :
- In case the employee receives Salary from more than one employee he shall report the same in a separate head as ‘ Reported total amount of Salary Received from other employers (s).’
- It further breaks for list of allowances exempted u/s 10 to be reported showing :
> Travel leave concession exemption u/s 10(5).
> Death cum retirement gratuity u/s 10(10).
> Commuted value of pension u/s 10 (10A)
> Leave en-cashed u/s 10(10AA).
> House rent allowance u/s 10(13A).
- A special field for specifying Standard deduction from AY 2019-2020 from the Salary has to been inserted.
- Other income has been further bifurcated to Income from house property and Income from other sources.
- A new field of deductions u/s 80CCD has also be inserted.
- Education cess has been replaced with ‘Health and Education cess’.
- The new form is effective to be applicable from 12th May 2019.
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