Form 16 in ITR - Everything you need to know

If you are an employee in India, it’s that time of the year when you have started sending out mails to your company’s finance department personnel asking for Form 16s. So why  is Form 16 one of the most significant financial records to keep track of for future reference? If you are new to the job and don't know what this form is about, read this post to learn everything about Form 16.
 

What is Form 16?

Form 16 of the Income Tax is an important certificate that is issued by your employer.  The document serves as proof that your employer has deducted the TDS and deposited it with the Income Tax Department on your behalf. However, the employer considers various factors before deducting tax and submitting it to the Income Tax Department.  For example, they factor in your house loans, insurance premiums, house rent, and other essential details provided by you. If you worked for more than one employer during the financial year and each opted for tax deduction at source (TDS), you must get a separate Form 16 from all.
 

Form 16 Eligibility Criteria

 
Form 16 is for salaried workers only. Even if you do not fit into the taxable category, your employer may deduct tax at source in certain instances. So, regardless of whether your income is taxable or not, you are eligible to acquire Form 16 if TDS is executed.
 
If your annual income is less than Rs 2.5 lakhs and your employer has not deducted any tax, they are not obligated to issue Form 16.
 

List of information required for filing return using Form 16

 
Here are key details to note from Form 16 while filing your ITR.
 

• Mention the details of allowances that are exempt under Section 10. 

• List of deductions that qualifies under Section 16.

• Taxable salary

• Any income or loss from house property and income from other sources (if offered for TDS)

• List of deductions that fall under Section 80C

 

Components of Form 16

 
Form 16 consists of two parts. One is Part A, and the other is Part B. Scroll down to learn more about them.
 

Details of Part A

• Personal information about the employee and the employer, such as address, PAN and TAN numbers, and so on.
• Assessment year
• Period of employment
• Summary of the TDS and salary
• TDS payment receipt's acknowledgement number

 

Details of Part B

• Salary breakup highlighting basic house rent allowance, leave encashment, leave travel allowance, and more. 

• It includes a list of exemptions under Section 10, such as exemptions related to HRA, conveyance allowance, children's hostel and education expenses, etc.

• Rebate or relief under Sections 87 and 89.

• List of deductions under Section 80

• Surcharges and education cess, if any.

What is Form 16A?

 
Form 16A is yet another TDS certificate. The main difference between Form 16 and 16A is that the former is only for salary income, and the latter is for other income (non-salary). For example, you can request Form 16A if your bank has deducted TDS on income from a fixed deposit. TDS is also deducted by the insurance company for which you work as an agent on commission.
 
Some of the crucial details mentioned on Form 16A are:
 

• Name and address of the TDS deductor and deductee. 

• Details about PAN and TAN

• TDS challan deposit information

• Details of the income that are subject to TDS

All of the information on Form 16A is also available on Form 26AS. You can file your ITR using either of them.
 

What is Form 16B?

Form 16B is the TDS certificate related to the sale of the property. If you are buying a property, you must deduct TDS at the time of sale. TDS on the property sale applies to both land and buildings (except agriculture property). The TDS amount is 1% of the consideration amount under this provision.
 
The vital details on the Form 16B are:
 

• PAN details of the seller
• Assessment year
• Details of relief under Section 89
• Payment acknowledgement number
• Salary break up

 
Also Read: All You Need To Know About the New Income Tax Return Forms
 

Difference between Form 16, Form 16A, and Form 16B

 

Parameters	Form 16	Form 16A	Form 16B
Who can issue it?	Employer	Deductors like banking institutions, insurance companies, etc.	Buyer of the immovable property.
Legal backing	It is dealt under Section 192.	It is dealt under Section 194.	It is dealt with in Section 194IA.
Details mentioned	It highlights both your income and TDS details.	It only highlights the TDS details.	It only highlights the TDS details.

 

Why is Form 16 important for salaried individuals? 

 

1. ITR filings

   Form 16 serves as a reference while you are filing your tax returns. It includes details related to your income, tax computation, deductions, and TDS. 
    

2. Backup proof

   It can help you get a tax credit. If there is a mismatch in your TDS credit, you can use the document as proof and furnish it before the Income Tax Department to solve the issue. 
    

3. Loan application

   Form 16 also serves as proof of income. If you are a salaried employee, your lender may request this document before processing your personal loan or other loan application form.
    

4. Visa application

   As previously stated, Form 16 serves as income proof. It assists the authority in verifying your identification and financial status. Having this document will thereby expedite the processing of your VISA application.
    

How to get Form 16?

 
TDS for the current financial year is usually provided by your employer. But, you also have an option to download it from the official website of the Income Tax Department. You may save the pdf on your system or print it for future reference.
 
Also Read: Guide to e-Filing or Online Filing your Income Tax Returns
 

To Conclude:

 
Form 16 is a crucial document for salaried employees. It is essential in various situations, including ITR filing, loan or visa applications, and so forth. Make sure you get this form from your employer before June 15, 2022, for the financial year 2021-22.