The month of July is here, and you must now be thinking of filing your Income Tax Return (ITR) now. The due date of filing ITRs for salaried employees and small businesses is 31st July. You can check this step-by-step guide to file your income tax return online. For the salaried class, Form-16 acts as a primary document helping them file their returns. It is the document which helps them know their salary earned during the year and the tax deducted thereon by their employer.
How Do You Get Form 16?
Your employer has the liability to deduct tax on the salary paid by them. The tax is deducted at the average rate of tax applicable to the respective employee and then deposited on monthly basis to the Income Tax Department by the employer. As per the rules, the employer files a quarterly TDS return showing the details of the amount paid and tax deducted in respect of each employee. These quarterly details are consolidated by the employer annually. They then issue Form-16 containing these details.
Why Do You Need Form 16?
Form 16 contains the details of the salary received by the employee, including the taxability of such amounts. Further, the amount of tax deducted is also certified by the employer through Form-16. As such, it contains all the requisite details as may be required by the employee to file their ITR. In case you have switched jobs during the year, you will receive individual Form-16s from respective employers.
Components of Form 16
Form 16 is issued by the company in a specific format, as specified by the Income Tax Dept. It contains two parts:
Part A – It contains the details of the tax deducted by the employer. It will contain the following information:
- Name and address of the employer
- Tax Deduction Account Number (TAX) of the employer, which will be required to claim the credit of tax deducted.
- PAN of the employee
- Summary of Tax deducted & deposited on a quarterly
- Assessment Year (the year immediately succeeding the financial year), e.g. for the financial year 2016-17, the Assessment Year would be 2017-18
- Unique TDS Certificate Number which can be used to check the authenticity of the certificate generated by the employer. Form 16 Part A must be generated and downloaded through Traces portal and hence, can be verified online too.
Part B – It is basically an annexure to Part A and contains the breakup of the salary so paid by the employer into salary, taxable allowances, perquisites etc. It also contains the breakup of the deductions under Chapter VI-A on the basis of details so submitted by you to the employer. It also shows your total taxable income and tax deducted on such income.
What Do You Need to Share from Form-16 in the ITR?
While filing your ITR, you will need the following details from Form-16:
- Details of Salary and their taxable portion
- Breakup of the deductions under Chapter VI-A
- TDS Deducted by the Employer
- TAN of the Employer
- Name and Address of the Employer
- Assessment Year matching with the assessment year for which return is being filed
What if my employer has not issued Form 16 to me? Should I not file my taxes?
It must be noted that the employer only issues you the breakup of the salary so paid by him. On the other hand, the ITR needs to contain the complete details about all the incomes so earned during the year. Even while your employer is responsible for issuing Form-16 to you, the onus to file ITR lies with you only. Your employer may not issue you Form-16 if it has not deducted any tax against your salary. You might still be liable to file your ITR considering your other incomes like rental income, profit on the sale of shares etc. So, you should accordingly prepare and file your ITR. Further, in case you switched your jobs during the year, don’t forget to include the income from all your employers, whether or not Form 16 was issued by them.
Do remember to use your Form 16 to file your income tax return online in time.
Simardeep Singh is a Chartered Accountant based in Delhi. He loves sharing his knowledge about personal finance and investment. He blogs regularly at www.simardeep.com.