During the end of the financial year, the atmosphere in every organisation is the same. It’s a busy time for small and large businesses and tax consultants as they are completing bookkeeping, income tax filing and planning for the new financial year. Amidst all the chaos, an employer should not forget to handover form 16 to his employees.
Often referred to as salary certificate in layman’s terms, form 16 is a certificate issued by an employer to all his employees at the end of a financial year. The form reflects the total salary paid and amount of tax deducted (TDS) during that particular year.
Usually, May 31st is the last date for an employer to issue form 16. For individuals receiving the form, it is important to file tax returns by July 31st. From income tax filing point of view, form 16 is a crucial document, and thus it must not be taken lightly. If you are unable to file tax returns by yourself, it is always better to seek help from professional tax consultants.
The following components are mentioned in form 16:
- Personal details of the employees such as name and permanent account number (PAN)
- Employer details such as name, PAN, tax deduction and collection account number
- Acknowledgement number of the taxes paid by the employer
- Complete details of the salary: gross salary, net salary, deductions and perks
- Total income and salary deduction
- Taxes deducted as per sections 191A
- Declaration of tax payments from the employer
- Refunds, if any, to the employer
- Receipts of TDS paid
- All details of tax payment: cheque no number and challan number
Form 16 has two parts to it: Part A and Part B
Part A is the certificate of TDS. This is the proof that an employer has deducted TDS from the salary of the employee and paid to the government account.
It is also referred to as TRACES form. It contains the following credentials:
Personal details of the employee, address and PAN card number
Address, PAN and TAN of the employer
Duration of the period an employee worked for an employer during the particular financial year.
The assessment year
Summary of taxes deducted and paid into the government account by the employer
Apart from the above details, form 16 also comprises of other details such as BSR code of the bank branch and mode through which payments are made for reference. Proper inclusion of details is of utmost importance before an employee can claim TDS from the government. Taking the help of a tax consultant can make the whole procedure much smoother. Since they know the tricks of the trade, they will help you in income tax filing and claiming TDS refund.
Thus, part A is a summary of tax deducted from your income and deposited to the government. While part A must be filled meticulously, part B is no less. It is equally important. It is an annexure containing details of salary paid, income, tax due and tax paid. It highlights a detailed record of the salary of an individual. The following details are mentioned in part B of form 16:
Exemptions claimed under section 10
Net taxable salary
Deductions from salary under section 80C to 80U
Amount of tax on income
Income tax paid and tax or refund due
It is mandatory for an employer to issue the TDS certificate to an employee if tax has been deducted. In case, no TDS has been deducted, form 16 does not have to be issued.
Once an employee receives form 16, it should be checked thoroughly. Failure to do so may result in mismatch of TDS refund. If there is any error in your form, you will have to ask your employer to rectify it since it is he who has generated it for you.
If you annual taxable income exceeds Rs. 2 lakh, income tax filing is a must. If it is above Rs. 5 lakh, filing your ITR online is mandatory. A tax consultant can help you file your annual returns. This will help you avoid any kind of errors in calculation.
Managing taxation can be quite a tedious task. If an individual has just one or two sources of income, it can be done yourself. However, if large amount of TDS refund has to be claimed, hiring a tax consultant is recommended. Since they know the nitty-gritties of income tax filing and tax complexities, they will give you sound advice.
In India, every now and then, tax policies change during the budget. It may not always be possible for you to be updated about all the tax rules. In the process, you may end up filing an incorrect tax return. A tax consultant not just effectively helps you file returns, but also gives you different tax saving options which helps reduce your total taxable income.
If you are looking for a tax consultant to file your income tax returns or claim TDS refund, we at Dial Jordan have you covered. Our exhaustive list brings you the very best of chartered accounts that are well-versed in their field. They usually charge according to the income source and complexity of returns. Generally, the base charges are Rs. 500 to Rs. 1,000 depending on how many returns have to be filed.
It’s time to file your returns in a simple and cost-effective manner, hire a tax consultant today. No matter what your requirement is, we’ll make sure you find what you’re looking for. Click here for more information.
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