Form 16 plays a crucial role in accurate filing of income-tax returns (ITR) by taxpayers. This form, issued by employers, shows the tax deducted at source (TDS).
“According to Rule 31 of the Income-Tax (I-T) Rules, employers must annually issue Form 16 to employees by June 15 of the following financial year. For example, Form 16 for the financial year 2023–24 should be given by June 15, 2024,” says Suresh Surana, founder, RSM India.
Form 16 contains details of salary income, deductions, and exemptions.
“Section 203 of the I-T Act, 1961, mandates every employer acting as a tax deductor to provide employees or deductees with a certificate stating the deducted tax amount, rate, payment date, salary computation, etc.,” says Surana.
If you have multiple Form 16s
When an employee changes jobs in a year and has multiple Form 16s, she should share her previous salary details with the new employer to ensure accurate tax calculation.
“If not done, the employee will have to pay taxes while filing the ITR,” says Alay Razvi, partner, Accord Juris.
Tax liability arises at the time of ITR filing because each employer considers exemptions and deductions in their calculations, and they are claimed twice in a year.
“While calculating the taxes for ITR filing, the details of both the Form 16s need to be clubbed. Deductions and exemptions should then be considered to arrive at the tax liability,” says Razvi.
Incomes, too, need to be combined.
“Total the income from both employers to determine your annual income,” says Bansal.
He adds that exemptions such as house rent allowance (HRA), leave travel allowance (LTA), and standard deductions should not be duplicated.
Deductions must be limited to the threshold for a single taxpayer.
“Though standard deduction may be listed separately in both forms, remember that it can only be claimed once,” says Bansal.
Preserve documents
Keep both Form 16s and other relevant documents handy in case you face queries from the taxman.
If no tax is deducted, the employer is not obligated to issue Form 16, but employees can request Form 16 Part B for smoother tax filing.
How to rectify TDS mismatch
- Compare Form 26AS with Form 16/16A to identify discrepancies in tax deducted at source (TDS)
- Notify your employer if you find mismatches
- Request the employer to correct errors promptly
- Ensure the employer files a revised TDS return with accurate details
- Respond to any Income-Tax Department notice about tax credit mismatch online through the Income Tax e-filing portal
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