What is Form 16?

Form 16 is a certificate provided by your employer that details your salary and the tax deducted at source (TDS) from your income. It is issued annually, typically by June 15, after the financial year ends. If you have worked with multiple employers during the year, you should receive a separate Form 16 from each employer.

Form 16 plays a vital role when filing income tax returns for salaried individuals, as it helps confirm the income earned and taxes deducted. The form is divided into two sections: Part A and Part B.

Difference Between Form 16, Form 16A, and Form 16B

• Form 16: This is a TDS certificate issued by your employer as proof of the tax deducted from your salary and deposited with the government. It is mandatory for filing income tax returns.

• Form 16A: Unlike Form 16, Form 16A is issued by financial institutions or other deductors (not your employer). It covers TDS deductions on income other than salary, such as interest from fixed deposits or insurance commission.

• Form 16B: Form 16B is issued for TDS deducted on property transactions under Section 194-IA of the Income Tax Act, 1961. When purchasing property, the buyer is responsible for deducting 1% TDS on the payment made to the seller. The buyer must then provide Form 16B to the seller as proof of the TDS deduction.

Eligibility for Form 16

Form 16 is issued to salaried individuals whose income is subject to tax deduction at source (TDS). If your income is within the taxable limits, your employer is required to issue Form 16 in compliance with the Ministry of Finance’s regulations.

If your income is below the taxable threshold, no TDS will be deducted, and therefore, your employer is not obligated to provide Form 16. However, since Form 16 offers a detailed summary of your earnings and taxes, many employers choose to issue it as a matter of good practice.