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Form 16

What is form 16?

Form 16 is a certificate issued by an employer to their employee that provides a detailed summary of the salary paid to the employee and the tax deducted at source (TDS) on the same. It is mandatory for all employers to issue Form 16 to their employees by the end of May every year.

Part A of Form 16:

Part A of Form 16 provides a comprehensive summary of the Tax Deducted at Source (TDS) deducted and deposited quarterly. It also includes essential details such as the Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) of the employer. Here are some important points to understand about Part A:

TDS Information: Part A furnishes a breakdown of TDS deductions made during each quarter of the financial year, which is certified by the employer.

Authentication: Employers can conveniently generate and download Part A of Form 16 via the TRACES portal (https://www.tdscpc.gov.in/app/login.xhtml). Prior to issuance, it's imperative for the employer to verify and authenticate the contents to ensure accuracy.

Multiple Employers: If you change jobs within a single financial year, it's essential to note that each employer will issue a separate Part A of Form 16 for the period of your employment with them.

Key Components of Part A:

Name and Address of the Employer: This section provides details about your employer, including their name and address.

TAN and PAN of the Employer: The Tax Deduction and Collection Account Number (TAN) and Permanent Account Number (PAN) of your employer are crucial for tax purposes.

PAN of the Employee: Your own PAN, or Permanent Account Number, is included for identification.

Summary of Quarterly TDS: Part A summarizes the tax deductions made from your salary each quarter, with the information being certified by your employer.

Part B of Form 16:

Part B of Form 16 complements Part A and is provided by your employer. It offers a detailed breakdown of your salary components and deductions approved under Chapter VI-A of the Income Tax Act.

It's important to remember that if you change jobs within a single financial year, you should obtain Form 16 from each employer for a comprehensive financial picture.

Key Components of Part B:

Salary Breakdown: Part B offers a comprehensive overview of your salary, helping you discern the various elements that constitute it.

Exempted Allowances under Section 10: This section outlines allowances that are exempt from taxation under Section 10 of the Income Tax Act.

Deductions Allowed under Chapter VIA of the Income Tax Act: Part B enlists several deductions permitted under Chapter VI-A, which include:

  • -Deduction for premiums paid towards life insurance, contributions to the Public Provident Fund (PPF), and more under Section 80C
  • -Deduction for contributions to pension funds under Section 80CCC
  • -Deduction for an employee's contributions to a pension scheme under Section 80CCD(1)
  • -Deduction for a taxpayer's self-contributions to a notified pension scheme under Section 80CCD(1B)

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