What is Form 16

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form 16
form 16

Under section 203 of Income Tax Act, an employer is liable to issue a certificate for deducting TDS from the employee’s salary. This certificate is called Form 16, at times it is also called Salary Certificate. It contains the detailed information of the salary paid and the tax deducted from the employee’s salary, by the employer. Form 16 should be issued by the employer to every employee, even if his/her income does not fall c

Uses and benefits of Form 16 for Income Tax

How can I use Form 16?

Form 16 is a document that contains the income details of an employee, it is used for the following purposes

  • To file Income Tax Returns, as it contains all the information regarding the tax deduction.
  • To verify the TDS deducted by the employer and the TDS collected by the government, by verifying the details with Form 26AS.
  • It can also be used as an income proof, while taking a loan from banks and other financial institutions.

Why Form 16?

Form 16 is required to file both Income Tax Return by the employee as well as refund by the employer on behalf of the employee. It can also be used as income verification certificate for various purposes, like applying for loan, visa etc.

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What is Form 16 all about?

Form 16 contains the following things: –

  • Employee’s personal details which include name, PAN number, date of birth etc.
  • Employer’s details such as name, TAN, PAN, etc.
  • Acknowledgement number, which is a verification number for the taxes paid by the employer.
  • Employee’s Salary details which contain employee’s net salary, gross salary, perks, deductions, etc.
  • Employee’s total income after tax deduction.
  • Surcharge and Cess details
  • It also contains the Tax deducted under section 191A
  • It includes the employer’s tax payment declaration
  • It contains the details of Refund if there are any.
  • Form 16 also comprises of TDS receipt, which is provided to the individual once he/she pays it.
  • Last but not the least, it contains tax Payment details such as Cheque number, Challan number, Demand Draft number, etc.

The above-mentioned details about Form 16 will help an employee to file his/her Income Tax Returns accurately.

Filing Income Tax Return

Form 16 is divided into 2 parts, they are

  • Form 16 Part A
  • Form 16 Part B
What does Form 16 Part A contain?
What does Form 16 Part B contain?
  • Part B of Form 16 contains detailed salary breakup.
  • It comprises of the deduction of tax under Income Tax Act.
  • If an individual has done more than one job in the year, then the individual will have to fill more than one Form 16.
  • It also contains relief under section 89.
  • Part B of Form 16 is prepared by employer and is attached along with Part A.
 What are the various Income Tax Slabs?

Income tax is a tax which is levied by the government on the financial income of individuals within their jurisdiction. Every year all individuals must file Income Tax Return to know whether they have any tax liability, or not and by filing Income Tax Returns they will also know, whether they are eligible for any tax refund or not. When an individual pays taxes to the government, government uses the amount generated from taxes, for the upliftment and the betterment of the society.

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Income tax may vary from person to person, depending on your salary, you fall under various tax slabs mentioned below: –

Income tax slab rates for individuals and HUF’S (Below 60 years) for the Financial Year 2017-18

Income SlabTax Rate
Income up to Rs. 2,50,000No tax
2,50,000- 5,00,0005%
5,00,000- 10,00,00020%
Above 10,00,00030%
Surcharge

  • 10% of Income Tax whose total income is above Rs. 50 lakh and below Rupees One Crore.
  • 15% of Income Tax whose total income exceeds Rupees One Crore.
Cess 3% of total income tax and surcharge calculated.

 

Income tax slab rate for senior citizens (above 60 and less than 80) for the financial year 2017-18

Income SlabTax Rate
Income up to Rs. 300000No tax
3,00,000- 5,00,0005%
5,00,000- 10,00,00020%
Above 10,00,00030%
Surcharge

  • 10% of Income Tax whose total income is above 50 lakhs and below Rs.1crore.
  • 15% of Income Tax whose total income exceeds Rupees One Crore.
Cess 3% of total income tax and surcharge calculated.

 

Income tax slab rate for super senior citizens (above 80 years) For the financial year 2017- 18

Income SlabTax Rate
Income up to Rs. 5,00,000No tax
5,00,000- 10,00,00020%
Above 10,00,00030%
Surcharge

  • 15% of Income Tax whose total income exceeds Rupees One Crore.
Cess 3% of total income tax and surcharge calculated

 

 

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