Taxpayers are now hurriedly filing their income tax returns (ITRs) with the last date of filing these returns looming nearer with each passing day. Most salaried employees have received their Form 16, thus, allowing them to fill in the details in the ITR forms. The hurriedness to file the ITRs well before the due date is evident from the fact that more people already filed and submitted their ITRs before June 26 compared to the previous year.
Salaried individuals only need to submit Form 16 when filing their income tax returns. Forms 16, 16A, and 16B serve as certifications for tax deducted at source (TDS) on earnings from different sources. These forms vary in terms of their intended use, eligibility criteria, and applicable situations.
What do you know about Form 16?
Form 16, commonly known as a “Salary Certificate”, is a document provided by the employer to the employee as a certification of TDS collected by the government. Only eligible salaried individuals can obtain Form 16 from their employers. It encompasses all the relevant information regarding the deductions made by the employer throughout the financial year.
On a monthly basis during the financial year, the employer disburses the employee's salary. In cases where the employee's overall income is subject to taxation, the employer computes the applicable tax amount and deducts it from the monthly salary.
Form 16 holds significant importance for salaried individuals who receive their pay post deduction of TDS. It serves as a crucial document to verify whether the employer has deducted the appropriate tax from the employee's salary.
What does Form 16 include?
Form 16 includes:
- Employer’s Permanent Account Number (PAN), Tax Deduction and Collection Account Number(TAN), as well as their name and address.
- Employee’s PAN, name, and address.
- Information regarding TDS and its subsequent deposit with the government.
Interpreting Form 16A
Form 16A is a certification specifically designed for Tax Deducted at Source (TDS) on income sources other than salary. For instance, banks deduct tax on eligible earnings such as interest from fixed deposits, rent, insurance commissions, and various other income types.
The details included in Form 16A are as follows:
- Name and address of the employer.
- Employee’s PAN details.
- Employee’s TAN details.
- Summary of quarterly tax deductions and deposits made.
Unveiling Form 16B
Form 16B serves as a certification for TDS on the sale of real estate, confirming that the buyer has submitted the TDS amount to the income tax department. During the sale of immovable property, the buyer is required to deduct one per cent TDS from the amount paid to the seller. It is the buyer's responsibility to remit the one per cent tax to the Income Tax Department and provide Form 16B to the seller.
Form 16B includes the following details:
- Tax computations
- Gross amount paid/credited
- Exemption/deduction claimed
- Any other income
Submitting ITRs with details in Form 16
Form 16 plays a vital role in the process of filing income tax returns for salaried employees. It is crucial that all the information provided in the form is accurate. Failure to submit your income tax returns by the deadline may result in the imposition of a monthly interest payment of one per cent. Additionally, it is advisable to check the Income Tax portal to ensure that the employer has deposited the TDS as required.