ITR: What Is Form 16 And Details To Check Before Filing Returns

With the new financial year starting from April 1, taxpayers are preparing to file their Income Tax Returns. The Income Tax Department is expected to notify the forms for the financial year 2024-25, or Assessment Year 2025-26, soon.

There are several documents one needs to have in place to ensure error-free ITR filing. One such document is Form 16. It is important for all salaried taxpayers to obtain Form 16 from their employers.

Both employers and employees need to understand the importance of this document when it comes to filing IT returns. Form 16, issued by an employer to an employee, contains information about an employee’s salary and tax deducted at source (TDS) for a particular financial year.

It proves that an employer has deducted the TDS and submitted it to the IT department. If you have switched jobs during a financial year, then you need to collect Form 16 from all your employers. 

Form 16 has two parts, Part A and Part B. Here's a detailed view of Form 16 before you file your ITR:

Part A has information about taxes that have been deducted and deposited by your employer in each quarter. It includes the employee’s name, address, and Permanent Account Number (PAN), and the employer’s Tax Deduction and Collection Account Number (TAN) and PAN. You can use Part A to check the taxes deducted from your monthly salary and tally them against your payslips.

Part B contains a detailed breakdown of the employee's salary and deductions and is an annexure to Part A. It contains a breakdown of exemptions allowed under Section 10 of the Income Tax Act, and details of deductions allowed under Sections 80C and 80D of the Income Tax Act, 1961. It can include deductions for life insurance premiums, payment of health insurance premiums and contributions to PPF.

Form 16 not only plays an important role in filing I-T returns, but it is also an important document when it comes to applying for loans. Several financial institutions use it as proof of income. Form 16 also helps in claiming tax refunds. In case of excess TDS compared to the total tax liability, the salaried taxpayer can use Form 16 to claim the refund.