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What is Form 16?

Form 16 is a document that is issued to an employee from its employer. It contains the details of salary earned by the employee and the income tax that has been deducted from his salary each month by the employer. Form 16 is Tax Deduction at Source (TDS) certificate issued by the employer and is applicable only for the salaried personnel.

As per The Income Tax Act of 1961 and Income Tax rules of 1962 which governs the laws of Income Tax Department of India, Form 16 is a mandatory document for filling the income tax return. For all those employees whose TDS is deducted , Employer is obligated to provide Form 16 at end of each financial year. Form 16 is an evidence that employer has deducted the TDS and paid it to the Income Tax Department of India.

 TAN: Tax Deduction Account Number

For an Employer to deduct TDS, they first need to have a Tax Deduction Account Number(TAN) issued from the Income Tax Department of India. Only those Firms or individuals with TAN allotted to them are authorized to deduct TDS and issue Form 16 to their employer. Tax Deduction Account Number is a 10 digit alpha numeric number, which is mentioned by the employer when he deposits the TDS in Government’s Account. AS per the provisions of section 203A of Income Tax Act , no firm or individual is allowed to deduct income tax at source without quoting the TAN. It is therefore mandatory for employer to quote TAN during TDS return.

Components on Form 16:

One can find below details listed on the Form 16.

  • Employee name , Permanent Account Number (PAN)
  • Employer name , Permanent Account Number (PAN) , Tax Deduction Account Number (TAN)
  • Details of employee Salary , Gross and Net Salary , Monthly Deductions
  • Acknowledgement Number of the Income Tax payment by the employer.

Form 16 A:

Form 16 A is similar to that of Form 16 , just having a different issuing authority. Apart from Tax on salary there are few others taxes that are deducted like the tax for interest earned from the fixed deposit in the bank. In these scenarios the deducing authority is the bank , which after deducting the tax issues a Form16A to their customers.

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