Get To Know About TDS Form 16

Employees receive a certificate from their employer called Form 16, sometimes called the TDS certificate. The fact that TDS has been taken out and deposited with the employer is sufficient proof. Taxes are deducted from income at the source, or TDS (Tax deducted at source).

Employers in India are required by the Income Tax Act of 1961 to deposit this TDS with the government. You would be wondering at this point whether it is possible to confirm that the TDS was actually deposited with the government. Form 16 can be used in this situation. Everything about Form 16 will be covered in this article, including its parts, requirements, benefits, and more.

What does Form 16 mean?

It includes information about the pay, how much TDS was taken off, and when it was deposited. The information on Form 16 is both helpful in confirming the TDS details and mandatory for income tax filing.

Part A & B of Form 16

Form 16 is divided into Part A, and Part B. Part B is an annexure to part A and contains the comprehensive pay breakdown, and the details of TDS deducted, whereas part A just contains the details of TDS deducted and deposited.

Form 16 – Part A

• Address and name of the employee
• PAN and TAN numbers of the employer
• Summary of the quarterly tax deduction
• Assessment year

The TRACES portal allows users to download Form No. 16 Part A.

Form 16 – Part B

• The breakdown of wages received
• Salary deductions are authorised by Chapter VI A of the Income Tax Act of 1961.
• The assistance offered under Section 89

Form 16 Eligibility

Employers must provide Form 16 to employees whose total compensation falls within the taxable income slab. The Finance Ministry of India claims that if a person's income is taxable and does not exceed the minimum slab rate, they are not required to obtain a TDS certificate or Form 16, and their employer is not required to do so either.

However, if a person's pay is outside the range of taxable income, they must provide form 15G to their employer. Your employer won't withhold TDS if you have this as proof of your income.

For information on Indian tax rates based on annual income, see the table below:

Form 16 vs form 16A vs Form 16B

Form 16 comes in three different varieties: Form 16, Form 16A, and Form 16B. Let's examine how these differ from one another.

Form 16

Form 16 refers to a certificate of tax deducted at source for income received in the form of salary, as was previously mentioned. It includes all the information regarding the salary amount, deductions, and deducted TDS amount.

Form 16A

The information on TDS deducted on income from sources other than pay is shown in Form 16A. These sources may include interest earned on fixed deposit, bond, capital gain, gold, etc. investments.

The revenue from these investments is often subject to income tax regulations. Financial institutions that are offering these assets are required to deduct TDS and provide Form 16A, or a TDS certificate, to the individual.

Form 16B: 

The buyer must withhold 1% TDS and provide the seller with a TDS certificate, known as Form 16B, whenever immovable property other than agricultural land is sold for more than Rs 50 lakhs. The information on the sale of the property and the TDS deducted is contained in Form 16B.

Benefits of Form 16

You must already be aware from the explanation above that Form 16 serves as evidence that the deduction money was properly deposited with the government and was not utilised for any other purpose. But this is not the only advantage of Form 16. It can also help you in a number of other ways, including

1. facilitating submitting income tax returns.
2. It serves as evidence of income.
3. Describes the paid amount, exemptions, deductions, and how tax is calculated
4. determining whether the information is accurate and having it updated
5. Get all of your tax-saving investing information in one convenient location.
6. It aids you in requesting refunds if necessary.

Filing ITR with Form 16 Process

To file income tax returns, Form 16 is required. However, it's crucial to register on the income-tax website and download the pertinent ITR before proceeding to file your return. Following the ITR download, you must take the following actions:

• Include information like the employee's name, PAN number, full address, email address, phone number, and DOB. The specifics of tax deductions, including the dollar amount and the date of the deduction, must also be filled out. For the purpose of filing income taxes, the information listed on Form-16 is crucial.
• The next step is entering your salary information and attaching the supporting documentation. The system will then automatically populate the tax liability.
• After determining the tax obligation, a tab will display information about the taxes already paid, those still owing, and any refunds that may be due. You must enter your bank information and confirm your declaration.
• The following step entails double-checking the information and hitting submit to upload the return.
• ITR-V is delivered to the specified email ID once you've submitted the return. ITR-V is a verification form that attests to the submission of the return.
• After the ITR has been submitted successfully, use the given link to e-verify the information.

You must have learned something about Form-16, its functions, and the significance of its issuance from this article. However, manually calculating Part-B of Form-16 for each employee can take some time. It is made incredibly simple by tools like RazorpayX Payroll. Additional features include

• Automatic calculation of salary and deductions
• Form-16 generation automatically
• control of absences and attendance
• Group health insurance that is inexpensive
• Automatic computation and filing of compliance requirements for TDS, ESI, and PF
• integrations with popular programmes like Slack, Freshteam, and others.

Conclusion:

The employer is required to give the employee a Form-16. It is a significant document that contains all the information about the pay and deductions. Additionally, it aids in the tax return filing process for the workers.