What is Form 16:- If you are salaried employee in an organization, then you will get the salary after deducting tax by the employer. Therefore Form 16 is a certificate issued to you by your employer stating the Personal details of the Employee including Name, Permanent Account Number (PAN) etc , details of the salary you have earned, Perquisites that has been offered, allowances given , details of Chapter VIA deductions and the tax deducted on your salary by your Employer and paid to the government. It also has Employer details like Name, permanent account number PAN, TAN etc.
This is the basic document which is required by the employee to file income tax returns because Form-16 contains income chargeable under the head “Salaries” which is the taxable salary. The same needs to be indicated in Income Tax Returns.
Form 16 has 2 parts - Part A and Part B.
Part A has TAN (tax deduction & collection account number) of the employer & PAN (permanent account number) details of both the employer and employee. The name and address of employer and employee is also mentioned. It also mentions the assessment year and provide summary of tax deducted from your income and deposited to the government as per the quarterly TDS return filed by the employer. A monthly detail of TDS deducted and deposited is also certified.
Part B is an important part of your Form 16 since it has a consolidated detail of salary paid to you during the year. The breakup of your salary as well as detail of deduction claimed by you under section 80 of the income tax act is mentioned. Deductions under Chapter VIA include details of amounts claimed under Section 80C for EPF, PPF, NSC, life insurance premium or Section 80D for health insurance, Section 80G for donations made are all mentioned here. It also shows your total taxable income and tax deducted on such income.
Necessity of Form 16 In Filing Income Tax Return: Form 16 is necessary to file an income tax return in India because Firstly, Form 16 acts as a checker for you to verify whether your employer has deposited the whole amount of TDS that he may have deducted from your salary. Secondly, it will enable you to file Income tax return disclosing the correct taxable salary income and various deductions from your salary like EPF, Profession tax and TDS.
Employer Obligation to provide Form 16 :- Further, it is the obligation of the employer to provide a Form 16 to all employees by 31 May of the assessment year (AY), if TDS has been deducted , In case no TDS has been deducted by the employer they may not issue you a Form 16.The employer can be liable to pay a penalty of Rs. 100 for each day by which he delays issuance of this certificate, also if you have been employed under more than one employer during the year, each of your employers will provide you a Form 16.
Filing of Income Tax Return without Form16:- Even if Form 16 has not been issued you cannot escape from the liability to file Income Tax Return , therefore to file income tax return without Form 16 you need to collect your monthly salary slip and compute total salary for the year.
Note: The amount credited in your bank statement is after deducting the tax at source but for reporting in ITR you need to calculate Gross Salary.
An employee receives many types of allowances in the form of salary while some allowances such as conveyance allowance, medical allowance, HRA, etc. are exempt from income tax while dearness allowance is completely taxable. Hence, the IT Department allows you to deduct the exempt allowances from salary to arrive at the figure of taxable salary.
Since you have not received form 16 from your employer, you must verify Form 26AS to know about the TAN and TDS deducted by your Employer
If you have other income as well apart from salary then sum up all the income like Income from renting of House property , capital gains from sale of assets , income from other sources like interest on bank deposits, RDs, FDs etc.
Deduct tax benefit from the above computed income like investments made under NSC, LIC, tuition fees, PPF, and repayment of principal of housing loan under section 80C. Similarly, donations made to charitable institutions can be claimed under section 80G, and payment made towards premium of medical insurance policy can be claimed in section 80D.
After summing up all income and deducting the tax benefits , the resultant computation will be taxable income. Now, calculate income tax on this taxable income using the IT slab rates for financial year 2014-15.
Now you are all set for filing tax return. You can now visit the online tax filing site to file your INCOME TAX RETURN
CA Sansaar
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CA Mahesh Kumar Gupta
25-Jul-2015 , 12:00:18 pmVery illustrative article. Pl guide how to derive form 16 in case of bank employee transferred from one branch to another, as form 16 is not available in case salary data is not furnished in IInd schedule in TDS return of Q 4. CA Mahesh Kumar Gupta