Form 16 is a certificate issued by employers to their employees. It confirms that the employer has deducted TDS on salary paid and deposited it to the tax authorities on behalf of the employee. It has all the essential details that you have to report while filing your income tax return.
Employers must issue Form 16 on or before 15 June of the immediately following financial year. This due date had been extended to 10 July 2019 for Form 16 related to FY 2018-19.
Form 16 has two segments - Part A and Part B. If you misplace or lose your Form 16, then you can request a duplicate copy from your employer.
Part A of Form 16
Employers generate Form 16 from the TRACES portal and this validates the details of TDS and other information at the time of issuing Form 16.
If you change your employer in a single financial year, then you will get more than one Form 16 as every employer issues separate Part A of Form 16 for the tenure of your employment.
Form 16 will contain the following details in Part A:
Part B of Form 16
Part B is a supplement of Part A. Form 16 will contain the following information in Part B:
Following are the key changes made to Form 16 in the financial year 2018-19:
1) Online generation of Part B details: Employers were previously required to prepare Part B on their own or by using a third-party software. As per the recent amendments, employers can now download the same from the TRACES portal.
2) In-depth disclosure of allowances and deductions: Earlier, employers could enter the aggregate details of allowances and deductions in Form 16. After the change is made by the tax department, an employer will have to provide full details of various deductions claimed and allowances paid or claimed exempt by the employee. This amendment is made to make sure that there is a standard format of Form 16 (TDS certificate) for salaried taxpayers.
Following are the exemptions and deductions that have to be reported separately by the employer in your Form 16:
Section 10 exemptions:
Chapter VIA deductions:
3) Describing income from other sources: Previously, the employers were not required to provide the details of an employee's income from other sources. The revised format of Form 16 includes disclosure of the income earned from 'Other sources'. Where an employee chooses to report income from other sources or loss or income under the head house property to their employer, the employer will include it in separate sections in Form 16.
(The author is Founder & CEO ClearTax)