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Form 16 is a TDS (Tax Deducted at Source) certificate issued by employers to their employees. It serves as proof of the tax deducted from the employee’s salary and deposited with the government on their behalf. Below is the format and details typically found in Form 16:
Part A: This section contains the details of the employer and the employee, including their names, addresses, and PAN (Permanent Account Number) details.
Part B: This section provides a summary of the employee’s income, deductions, and tax calculations. It includes the following information: a. Gross Salary: The total salary earned by the employee during the financial year. b. Exemptions: Any tax exemptions claimed by the employee, such as house rent allowance (HRA), leave travel allowance (LTA), etc. c. Deductions under Chapter VI-A: Details of deductions claimed under various sections of the Income Tax Act, such as Section 80C (for investments in specified instruments), Section 80D (for medical insurance premiums), etc. d. Total Income: The net taxable income after deducting exemptions and deductions. e. Tax Calculation: The computation of income tax based on the applicable slab rates and surcharges. f. Tax Deducted at Source (TDS): The amount of tax deducted by the employer from the employee’s salary. g. Education Cess and Surcharge: Additional charges applied to the income tax liability. h. Relief under Section 89: If any arrears or salary in advance are received during the financial year, the relief under Section 89 is calculated and mentioned here.
Part B Annexure: This section provides a detailed breakup of the salary components, allowances, and deductions considered for the tax calculations.
Employers are required to issue Form 16 to their employees by a specific deadline, usually on or before 31st May of the assessment year following the financial year in which the tax was deducted. It is important for employees to keep their Form 16 safely as it is required for filing their income tax return (ITR) and for any future tax-related purposes.