Business
Form 16 is a certificate issued by employers to their employees, stating the amount of tax deducted at source (TDS) from their salary.
Generally, it includes details like PAN, TAN, full address, wage deductions, TDS deductions, and any other amount disclosed by the employer’s employees and the employee.
Form 16 is a proof of deduction of TDS from salary income and helps employees to file Income Tax Return (ITR).
Form 16 is submitted annually by employers for the previous financial year on or before 15th June of the next financial year.
Employees use Form 16 to prepare their income returns, claim tax deductions and calculate their total taxable income for the ITR filed with the Tax Department.
Part A and Part B. Part A contains details of employer and employee, while Part B provides details of salaries, allowances, deductions and taxes distribution.
Employees should keep Form 16 safely because it is an important document in the case of income tax audits, investigations, or any inquiries by the tax authorities.
Apart from salary income, if an employee has other sources of income, he is required to declare and report separately while filing ITR, even if it is not mentioned in Letter 16 a.