Form 16 and its importance (FY 20-21)

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Form 16 and its importance (1)
Form 16 is a TDS certificate issued to salaried individuals by their employer when they deduct tax from the worker's salary.

What is form 16?

Form 16 is a TDS certificate issued to salaried individuals by their employer when they deduct tax from the worker’s salary. In simple words, it’s an acknowledgment which states your deducted tax has been deposited with the taxation department.

What’s included in form 16?

If you’re a salaried employee and filling ITR then form 16 is considered as the vital document. Form 16 is provided to the salaried employee by the employer and it consists of a pair of parts- Part-A and Part-B. For AY 2020-21, several changes were introduced about part B of form 16. The subsequent are the key fields while filing the ITR:

 Form 16 Part A

  • Name and Address of leader
  • Name and Address of worker
  • PAN (Permanent Account Number) and TAN (Tax Deduction and assortment Account Number) of Deductor
  • PAN and Reference variety of worker
  • Details of TDS (Tax subtracted at Source) deposited by the leader as well as deposits created by direct transfer, book adjustment, and challan.

 Form 16 Part B

The new form 16-part B Format as notified by the Central Board of Direct Taxes (CBDT) for AY 2019-20 can contain the subsequent fields:

  • Gross earnings with a break-up (e.g., Salary, perquisites, benefit from earnings, total, etc.)
  • Exempted allowances with the break-up
  • Break-up of deductions in part of recreation allowance, etc.
  • Gross total financial gain (as computed from previous information)
  • Deductions underneath applicable sections e.g., 80C, 80D, 80E, 80G, 80TTA, etc.
  • Aggregate deductible quantity underneath Chapter VI-A
  • Total financial gain
  • Tax on total financial gain (as per applicable tax block rate)
  • Education cess (@3%)
  • Tax collectible (before Section eighty-nine relief)
  • Details of relief u/s eighty-nine
  • Total Tax collectible

The new layout of form 16 is so in line with the details you’re needed to provide while filing your ITR1 making it easier for salaried people.

The Importance of Form 16.

The main role of Form 16 especially in its new form is obviously to provide easy access of details required for the correct filing of your ITR. Furthermore, form 16 consolidates a range of income tax-related information including but not limited to total income, (applicable deductions under various sections/sub-sections of the IT Act, relief u/s 89, total tax liability, TDS details, and net tax liability of the assessee).

Form 16 can be received only from their respective employers and cannot be downloaded from an alternate source.

For further detail please visit All India ITR

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