Every year your employer will issue this document. It is a certificate under the Income-Tax Act, 1961, which gives information on the tax deducted at source (TDS) from income chargeable under the head “salaries”. It gives details of the tax deducted by the employer or company and declares the amount. Form 16 is useful in filing income tax return (ITR).
Form 16 has two sections—part A and part B.
Part A consists of your personal details such as your name and address, your employer’s name and address, Permanent Account Number (PAN) of both, the employer’s Tax Deduction Account Number (TAN), and others. These details help the I-T department track the flow of money from you and your employer’s accounts.
Part B of Form 16 consists of Gross Incomes, Savings, Exemptions and detail of tax deposit to
I-T Department. In the last portion there is calculating the Total tax on your Gross Income after deducting the all savings and deductions. With the help of this Part B. We filled the Income tax Return for the year.
Is it mandatory for the employer to issue you a Form 16?
TDS certificate in Form 16 is only required to be issued to the employee when TDS has been deducted. In case no TDS has been deducted by the employer they may not issue you a Form 16.
When the employer deducts TDS and does not issue a certificate
Any person responsible for paying salaries is required to deduct tax at source on the amount payable. The act lays down that every person who deducts TDS from a payment must furnish to the recipient a certificate with details of tax deducted. An employer is compulsorily required to furnish you a certificate, in the format of Form 16, specifying that tax has been paid to the Central Government, with the amount so paid and other prescribed particulars.
An employer may be liable to pay a penalty for non-issuance of Form 16 where TDS was deducted.