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What is Form 16 – Basics, Part A and Part B of Form 16

Welcome to this post We’ll talk about the What are Form 16, Form 16 basics and Part A and Part B of Form 16...

What is Form 16- Basics?

  • Form 16 is a form of income tax. Form 16 is an employer-issued certificate and contains the information you need to prepare and file an income tax return. Form 16 is a certificate given to salaried individuals from their employer while deducting tax from an employee's salary. Alternatively, you can consider Form 16 as your Salary TDS testament. Assume the pay from your compensation for the money related year is more than the fundamental exception breaking point of Rs. 2, 50, 000. Then, in this case, your employer needs to deduct the TDS on your salary and submit it to the government.

Part A of Form 16:

This section of the Income Tax Form 16 contains details of employer, TDS payment. Part A of Form 16 contains the details of the deduction tax on the source of salary. The employer can download and generate this part A of Form 16 through the TRICES (https://www.tdscpc.gov.in/app/login.xhtml) portal.
Following are some of the components Part A of Form 16:
  • Name and address of the employer
  • Permanent Account Number (PAN) of the employer
  • Tax Deduction Number (TAN) of the employer
  • Permanent Account Number (PAN) of the employer
  • Summary of payments or credited amounts, and tax deductions at source specified in the employee's context

Part B of Form 16:

It is an attachment to Part A of Form 16 which is issued by the employer. If you change your job within one financial year, you have to decide whether you want Part B from both the form employer or the last employer.
Following are some of the components Part B of Form 16:
  1. Gross Salary(1): This section of Form 16 requires payroll details as provided in section 17 (1), permits and any profits received in lieu of salary.
  2. Exemptions and allowances considered: Exempted allowances under Section 10 of the Income Tax Act – medical allowance, house rent allowance, conveyance allowance, hostel expenditure allowance, and children education, etc...
  3. Amount of salary received from the employer: This part of the form calculates the total salary received, including allowances and other permissions.
  4. Deduction under section 16: Deductible payroll income - Recognized with entertainment allowance and professional taxes. All deductions are mentioned below:
    1. The standard deduction under section 16(i)
    2. Entertainment allowance under section 16(ii)
    3. Tax on employment under 16(iii)
  5. Receivable under the heading "Income from Salary": This column shows net income from all allowances and deductions after deductions
  6. Any other income declared by the employee in accordance with section 192BB: This column of the form enables the employee to declare any other income with proof of income.
  7. The total amount of other income reported by an employee: This column provides all employee-generated income other than salary.
  8. Gross Total Income: This column of the form indicates the total income of employees reduced by the exemptions but before deduction under Chapter VI-A.
  9. Deduction under Chapter VI-A: Previously, there was no separate list of deductions, it was an option to disclose the department under which the deduction has been claimed. But in Form 16, it is necessary to disclose the deduction according to a separate list.
  10. An aggregate of a deductible amount under Chapter VI-A: This column is the sum total of the deductions from all sections under Chapter VI-A claimed by the employee.
  11. Total taxable Income: This column is Chapter VI-A. The following refers to the employee's net income after taking into account the deduction. This is the amount on which the tax is calculated.
  12. Tax on Total Income
  13. Rebate under section 87A, if applicable
  14. A surcharge, wherever applicable
  15. Health and Education Cess
  16. Tax payable
  17. Relief under section 89
  18. Net tax payable
Download the new Form 16 format applicable for FY 2018-19: Part B of Form 16

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