What is Form no 16?
Form 16 is a TDS certificate issued to salaried person by employer which contains a detailed record of the income earned as salary and taxes paid on it in a financial year. It serves as a proof that the employer has deducted TDS from your salary and deposited with the Income Tax Department.
What is the difference between Form No 16 and Income Tax Return?
Income tax return is a form filled by taxpayer containing details of income earned, sources of those incomes and taxes payable on those incomes whereas Form 16 is a TDS certificate issued to salaried person by employer which contains a detailed record of the income earned as salary and taxes paid on it in a financial year.
Can I compute income tax at lesser amount than shown in Form 16?
Yes, you can compute income tax at lesser amount than shown in Form 16, if you have missed on certain tax savings in Form 16.
What will happen if I do not share my PAN or share wrong PAN with my employer?
The government made it compulsory for employees to share correct PAN if he is subjected to Tax Deducted at source. If employee shares wrong PAN then employer will deduct TDS at the rate of 20% or even higher.
Besides my salary income, do I need to inform my employer about my other incomes?
It is not compulsory to inform employer about any other sources of incomes but this will enable the employer to determine the accurate tax deductible and in case you don’t provide information about other sources of incomes then you need to pay advance tax or self assessment tax on such income.
What is part A and part B in Form No 16?
Form 16 certifies the details of your salary and tax deductions during the year as provided by the employer. The Form No 16 consists of two components: Part A and Part B.
Part A consists of information regarding the employee, employer, their PAN no.; TAN, TIN details, Address, TDS deductions, and deposits, etc.
Part B consists of information regarding other income sources, tax payable, salary paid by the employer, allowed deductions, etc.
In Form No 16, there are mentions of section 17(1), 17(2) and 17(3), what they do mean?
The section 17 under Form no 16 are separated under three sub- sections i.e., section 17(1), 17(2) and 17(3). The section 17(1) contains basic salary, DA, HRA, TA, LTA, ETC.
The section 17(2) contains valuation amounts of perquisites like rent free accommodation, ESOPs, motor car, etc.
The section 17(3) comprises of salary profits like commissions, fees or bonus.
What do you mean by perquisites?
Perquisites means ‘perks’ for the employees. These are non-monetary components of salary package of an employee. A perquisite is something you get as a result of your position. For example, if you work at a restaurant you might get free meals. If you get a job overseas you might get a ticket there or for holidays or paid housing or a moving allowance. In other words we can say that a perquisite is essentially a benefit that is offered by employers to employees as a result of their job position.
What is meant by profits in lieu of salary?
Any payment received by Employee from employer in addition to his salary or wages is known as profits in lieu of salary and it is taxable under the head of salary.
What is meant by standard deduction?
Standard deduction is a fixed deduction deducted from annual salary and it reduces the taxable income which will reduce the tax amount. The standard deduction allowed for salary is Rs 40000. For example, if the annual salary of a person is Rs 600000 then standard deduction will be Rs 40000.
