Form 16 is an essential document for a salaried individual filing an ITR. Owing to the increasing filing of tax returns or ITR, the CBDT has recently made significant changes in the details contained in Form 16. These changes are made in an attempt to curb tax evasion.

Therefore, the form is supposed to carry every detail of the salary components along with the exempted amount of various allowances of the said individual/employee.

Form 16 and 16a are the primary parts of this form as they contain the details of the employer.

What is form 16?

Form 16 can be functionally described as a certificate issued by the employer to its employees in each financial year as a proof of TDS deductions from their salary.

It is mandatory to issue this certificate to every taxpayer by his/her employer. The primary use of Form 16 is to file Income-tax Return (ITR). As a salaried individual, you can do the same by yourself without the need of a chartered accountant or any professional.

What is form 16A and 16B?

Form 16 has two parts 16A and 16B. Both these parts contain details of the employee as well as the employer. The details mentioned in form 16A are listed below –

• Employee’s name.
• Employee’s address.
• PAN of employee.
• Employer’s name.
• Employer’s address.
• PAN of employer.
• Amount of tax deducted.
• Date of deposition.
• Details of Challan issued.

Similarly, form 16B has the complete details of the breakdown of your salary. The details are stated hereunder –

• Gross salary.
• Exempted allowances.
• Employment tax.
• Deductions like PPF, NSC, etc.
• Deductions under NPS, mediclaims.
• Tax on total income.
• Levied cess.
• Rebate on tax.
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• Verification of signature and your consent.

In case you have worked with more than one employer in a financial year, you will get two separate Form 16 and 16a as well. However, if there is no tax deduction, then you may not receive any such form.

Who are eligible for Form 16?

Any salaried individual whose tax is deducted at source by the employer is eligible to comply with Form 16. It does not depend on whether your income falls under the income tax bracket, but your employer is liable to issue you the form in case they have deducted tax.

Even if you want to apply for a credit card, you can present your form 16 as an income proof document.

How to fill and download form 16?

As it has two sections, the form needs to be filled separately. The primary use of form 16 is evident while filing tax returns. Prior to that, you need to fill out both parts A and B.

Part A –

As already mentioned, you need to enter your employer’s name and address, employee’s name and address, PAN of employer and employee, details of Income-tax Commissioner, amount of tax deducted, a period of assessment of tax.

Part B –

For the second part, you are required to fill in your gross income, allowances, chargeable income, tax on total income, any educational cess along with verification your consent.

You can simply download Form 16 and 16a and form 16b from the income tax website in five simple steps.

1. Log in to your account by stating your basic details.
2. Select Downloads option
3. Choose Form 16 from there
4. Enter the relevant financial year for which you need the Form 16.
5. Click on submit to download the form.

It is essential that you furnish proper and accurate information in the forms.  For instance, your application for a credit card may be rejected if your income statement is not accurate.

What are the benefits of Form 16?

As both Form 16 and 16a along with 16b contain every detail of your employment, you can check for any discrepancies regarding deductions by your employer. Alongside, it can serve as a document to monitor all your tax exempted investments. Simultaneously, you can use it as a statement of income as well.

Thereafter, if you wish to avail a credit card loan, you can provide Form 16 as your proof of income. Leading financial institutions extend their financial products to individuals with minimum eligibility and documentation including only KYC and Form 16 as the basic requirements.

They also provide pre-approved offers to ease the application procedure for such financial products. These offers are available on credit cards, personal loans, home loans, etc.as well as on numerous other financial products. You can check your pre-approved offer by providing just a few basic details.

Form 16 is an essential document for a salaried individual as it serves as proof that his employer has deducted the tax. It will thereafter be helpful in filing tax returns.