• Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Your Finance Book

Income Tax | Investing | Stock Market

  • Stocks
    • 10 reasons why share prices decline in the stock market
    • What to look for in growth investing strategy for better return
    • 10 things you must understand before buying stocks
    • Speculating Vs Investing Vs Saving
    • 5 Risk free tax saving investments
    • A beginner’s guide to understand stock’s value – Explained with examples
    • Mutual Fund Basics
  • GST
    • GST registration in India – all you need to know
    • Tax invoice in GST-A complete beginner’s guide for taxpayers
    • Input tax credit in GST – A beginners guide to claim ITC
    • What is inter-state supply of goods and/or services under GST
    • What is intra-state supply of goods and/or services under GST
  • Income tax
  • Tax Rates
  • ITR Due dates

Salary TDS certificate Form 16 – All you need to know

Last Modified on April 10, 2022 by CA Bigyan Kumar Mishra

Form 16 issued by employer is referred to as a Salary TDS certificate in which employer certify the total amount of tax that has been deducted out of employee’s income and deposited against employee’s permanent account number (PAN) for the whole previous year.

If employer has issued form 16 for the financail year 2021-22, then it should have details of tax deducted out employee’s salary income along with other tax details of both employer and employee.

Form 16 contains all the information that employees are required to prepare and file an income tax return.

Before getting into what is salary TDS certificate form 16 and what are its different components, we must discuss why salary TDS certificate is issued in Form 16 by the employer to the employees and when it should be issued.

Why employer issues salary TDS certificate in form 16?

Every employer is required to deduct tax while paying salary to employees if their income from salary for the financial year is more than the basic exemption limit. Tax has to be calculated on the taxable income based on the slab rates in force for the financial year in which it has to be deducted. Basic exemption limit for the financial year 2021-22 and 2022-23 is Rs 2,50,000.

Employers need to do the tax calculation based on the forecasted earnings and investment declarations made by the employee at the beginning and during the year. For further details, we have written a different article on how TDS on salary is calculated and deducted out of employee’s salary.

Tax deducted by the employer from employees salary has to be deposited monthly with the Income Tax Department. Quarterly TDS return in form 24Q has to be filed on or before the due date of filing with all the information of tax deducted and deposited on salary.

Now the question is how an employee will know the actual amount of tax deducted at source (TDS) that has been deducted and deposited by the employer out of salary.

To let employees know the amount of tax deducted and deposited by the employer, the government has made it mandatory vide section 203 of the income tax act, 1961 for all employers deducting tax from employee’s salary to issue form 16 (salary TDS certificate) by certifying tax deducted and deposited against Permanent Account Number or PAN of the assessee.

Based on this provision, the employer is bound to issue form 16 by certifying the total amount of tax deducted and deposited with the government to the employee with all the prescribed details.

Is there any other way to check tax credit regularly

Yes, employee can check form 26AS online every quarter after the due date of filing TDS return, to know how much tax credit employer has given for the quarter.

For each quarter, the due date of filing TDS return in form 24Q is the last date of the following month of each quarter. The only exception is the last quarter of the previous year. For the last quarter (starting from January 1 to 31st march), the due date of filing TDS return is 31st May.

You can cross check tax deposited amount in 26AS with salary slip to know whether entire deducted amount has been deposited or not.

What details form 16 provides to employees

Form 16 contains all the salary details given by the employer to employee and tax deducted out of it for the whole previous year.

Employer has to download form 16 from tax department’s traces portal after filing TDS returns for the whole year against the permanent account number of all eligible employees.

Form 16 has two components: Part A and Part B. 

Part A

Part A of form 16 is downloaded from employer’s traces portal login. This part gives quarterly summary of tax deducted and deposited by the organisation from the salary income of employees. These details are derived from quarterly TDS return filed by the organization.

Form 16 has all the details of TDS amount including who has deducted tax from salary and how much has been deducted with quarterly break up.

Employer has to send digitally signed Part A and Part B of form 16 to all employees on or before 31st May of the following year to the previous year for which TDS amount has been deducted. For instance, in case of financial year 2021-22, form 16 must be issued on or before 31st May 2022. The government may extend this due date of sending form 16. If the last date of sending form 16 has been extended, then such extended date will be considered as the last date by which employer should issue form 16 to the employee.

Part A of form 16 includes following details;

  • Name and address of both employer and employee.
  • TAN of the employer.
  • PAN of both employer and employee.
  • The assessment year for which tax has been deducted and deposited.
  • Period of employment
  • Summary of salaries paid
  • Date on which tax has been deducted from employee’s salary
  • Date on which tax deposited with the government.
  • Summary of tax deducted and deposited every quarter with tax department.

It provides all the details to know who has deposited tax against your PAN, when and how much they have deposited.

Part B

Part B of form 16 is actually an annexure to Part A. Recently tax department has amended part B of form 16 to provide section wise break up of exemptions allowed under section 10 and deductions claimed under chapter VI-A.

It provides the following details to employees;

  • Detailed breakup of salaries
  • Exemptions allowed under section 10 of the income tax act, 1961.
  • Tax deduction allowed under chapter VI-A.

In cases where the employee has worked for two or more employers during the financial year, separate reporting is required for such salary income in new form 16.

In addition to salary income from current and previous employers, form 16 also has fields for income from other sources and income from house property. These fields will be filled up only when employee has reported these incomes to employer and they have filed it in TDS return with the income tax department.

Standard deduction under section 16 and tax rebate u/s 87A is also mentioned in form 16.

What is the difference between form 16, 16A and 16B

Do not get confused between form 16, 16A and 16B, they all are different. All these forms are downloaded from traces portal. TRACES refers to TDS Reconciliation Analysis and Correction Enabling System.

Form 16A is issued when tax has been deducted from non-salary payments such as for TDS on professional fees, TDS on rent, interest on bank deposits and commission. Form 16B is issued when tax has been deducted under section 194IA by the buyer for purchasing property valuing Rs 50,00,000 or more.

If you have worked for more than one employer during the previous year, then you will receive Form 16 from each of these employers.

Share this:

  • Click to share on Twitter (Opens in new window)
  • Click to share on Facebook (Opens in new window)

Filed Under: Income tax

About the Author

CA Bigyan Kumar Mishra is a fellow member of the Institute of Chartered Accountants of India. He writes about personal finance, income tax, goods and services tax (GST), company law and other topics on finance. Follow him on facebook or instagram or twitter.

Primary Sidebar

Financial Ratios

  • Accounting tools you can use to choose a winning stocks
  • What are the tools and techniques used in financial statements analysis
  • Can Price to earnings – P/E ratio be used for stock investing
  • Why Price earnings to growth – PEG is used by investors
  • How Earnings per Share or EPS can help you
  • How to use debt to equity – D/E ratio
  • What is Interest coverage ratio

Don’t see a topic? Search our entire website:

Email Newsletter

Sign up to receive email updates daily and to hear what's going on with us!

Privacy Policy

Popular Posts

  • How to protect yourself from stock market frauds and scams
  • Income tax rates for Financial Year 2021-22 and 2022-23
  • How to decide which strategy is right for you in stock investing
  • Stock market basics – A complete guide for beginners
  • How to get tax deductions on Life Insurance Premium – Section 80C
  • Why to use Japanese candlestick charting for trading and investing
  • 10 most commonly used stock market jargons you must know
  • How tax is deducted from Salary – 192
  • Tax to be deducted on Professional Fees – 194J
  • TDS On Rent – 194I
  • Things to remember while buying stocks on margin
  • Top 20 reasons why income tax PAN is a must for Indians

Footer

Trending Now

  • What to look for in the financial statements before investing in stocks
  • How to manage fund while investing in stocks
  • A beginner’s guide to mutual fund investing
  • Why share prices move up and down in stock market
  • Price Action trading – How candlestick helps to read mass psychology

Stay In Touch With Us

  • Twitter
  • Facebook

SITE LINKS

  • About Us
  • Contact Us
  • Terms and Conditions
  • Disclaimer
  • Privacy Policy
  • Finance

Legal Disclaimer

The information available through this Site is provided solely for informational purposes on an “as is” basis at user’s sole risk. The information is not meant to be, and should not be construed as advice or used for investment purposes. Yourfinancebook.com does not provide tax, investment or financial services and advice. We make no guarantees … Continue Reading... about Disclaimer

Copyright © 2021 yourfinancebook.com · All Rights Reserved.