For businesses having 1 – 25 employees. Includes TDS Filing for Q4 with Annexure II, Form 16 issuance and ITR-1 filing for employees.

RS.200

GET STARTED

Form 16 Issuance

 

Form 16 Issuance to Employees

Form 16 is a certificate that employers issue to their employees. It is a validation that the TDS has been deducted and deposited with the government authorities on behalf of the employee of the organization.

Form 16 gives a detailed summary of the salary paid to the employees and the deducted TDS. TDS Form 16 contains all the information that an individual needs to prepare and file the income tax return.

The employers are required to issue a Salary TDS certificate every year on or before the 15th of June of the coming year immediately after the financial year in which the tax is deducted. There are two components of Form 16 Part A and Part B. If an individual loses Form 16 he can request a duplicate Form from the employer.

IndiaFilings can help you manage TDS compliance online. Our TDS experts will help you file all the TDS returns pay any overdue TDS deposits and also the issuance of Form 16 to the employees.

TDS on Salary

TDS is calculated on the income tax rates that are prescribed for the financial year in which the payment of the employee is made. An individual responsible for paying the taxes can increase or decrease the amount that is deducted based on any adjustments in the previous deficiency or excess deduction.

The total amount of the TDs will be determined by the following elements:

Exemption LimitLeave EncashmentNotified Allowances
House rate allowancePerquisitesDonation by employees under 80G
Other deductionsBonus or incentivesEstimated Salary

If an individual is employed by more than one employer during a financial year then tax will be deducted on the aggregate salary by one of the employers as chosen by the employee by submitting information in Form 12B.

Thus if an employee has more than one employer in a financial year then he is required to furnish information in Form 12 B to one of the employers. Once Form 12B is submitted it becomes an obligation for the employer to deduct TDS.

Structure of Form 16

Part A of Form 16

It provides the details of the TDS that is deducted and deposited. This form can be generated by the employers through the TRACES portal.

The employer must verify the contents before issuing the certificate. Here are a few components of Part A of the salary TDS certificate.

  • Name and address of the employer
  • TAN and PAN of employer
  • PAN of the employee
  • Summary of tax deducted and deposited quarterly, which is certified by the employer.

Part B of Form 16

It is an annexure to Part A, Part B is prepared by the employer for its employees and it contains details of the breakup of the salary deductions approved under Chapter VI-A. In case of a job change in one financial year, Form 16 should be obtained by both employers. Some of the components of Part B are:

  • Detailed breakup of salary
  • Detailed breakup of exempted allowances under Section 10
  • Deductions that are allowed under Income Tax Act (Under Chapter VIA)

Here is the list of deductions

  • Deduction for life insurance premium paid, contribution to PPF, etc. under Section 80C
  • Deduction for contribution to pension funds under Section 80CC
  • Deduction for employee’s contribution to a pension scheme under Section 80CCD(1)
  • Deduction for taxpayer’s self contribution to a notified pension scheme under Section 80CCD(1B)
  • Deduction for employer’s contribution to a pension scheme under Section 80CCD(2)
  • Deduction for health insurance premium paid under Section 80D
  • Deduction for interest paid on loan taken for higher education under Section 80E
  • Deduction for donations made under Section 80G
  • Deduction for interest income on savings account under Section 80TTA