Form-16 issuance
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For businesses having 1 – 25 employees. Includes TDS Filing for Q4 with Annexure II, Form 16 issuance and ITR-1 filing for employees.
For businesses having 26 – 100 employees. Includes TDS Filing for Q4 with Annexure II, Form 16 issuance and ITR-1 filing for employees.
Structure of Form 16
Part A of Form 16
It provides the details of the TDS that is deducted and deposited. This form can be generated by the employers through the TRACES portal.
The employer must verify the contents before issuing the certificate. Here are a few components of Part A of the salary TDS certificate.
- Name and address of the employer
- TAN and PAN of employer
- PAN of the employee
- Summary of tax deducted and deposited quarterly, which is certified by the employer.
Part B of Form 16
It is an annexure to Part A, Part B is prepared by the employer for its employees and it contains details of the breakup of the salary deductions approved under Chapter VI-A. In case of a job change in one financial year, Form 16 should be obtained by both employers. Some of the components of Part B are:
- Detailed breakup of salary
- Detailed breakup of exempted allowances under Section 10
- Deductions that are allowed under Income Tax Act (Under Chapter VIA)
Here is the list of deductions
- Deduction for life insurance premium paid, contribution to PPF, etc. under Section 80C
- Deduction for contribution to pension funds under Section 80CC
- Deduction for employee’s contribution to a pension scheme under Section 80CCD(1)
- Deduction for taxpayer’s self contribution to a notified pension scheme under Section 80CCD(1B)
- Deduction for employer’s contribution to a pension scheme under Section 80CCD(2)
- Deduction for health insurance premium paid under Section 80D
- Deduction for interest paid on loan taken for higher education under Section 80E
- Deduction for donations made under Section 80G
- Deduction for interest income on savings account under Section 80TTA
TDS on Salary
TDS is calculated on the income tax rates that are prescribed for the financial year in which the payment of the employee is made. An individual responsible for paying the taxes can increase or decrease the amount that is deducted based on any adjustments in the previous deficiency or excess deduction.
The total amount of the TDs will be determined by the following elements:
| Exemption Limit | Leave Encashment | Notified Allowances |
|---|---|---|
| House rate allowance | Perquisites | Donation by employees under 80G |
| Other deductions | Bonus or incentives | Estimated Salary |
If an individual is employed by more than one employer during a financial year then tax will be deducted on the aggregate salary by one of the employers as chosen by the employee by submitting information in Form 12B.
Thus if an employee has more than one employer in a financial year then he is required to furnish information in Form 12 B to one of the employers. Once Form 12B is submitted it becomes an obligation for the employer to deduct TDS.
Deposit of Tax to Government by Employers
The deducted tax from the employees’ salary should be deposited by the employer along with an income tax challan ITNS 281 on or before the 7th of every month for the previous month.
Recently, from 2008 all the corporate assessees and assessees are subject to tax audit are required to make all the TDS payment online through an internet banking facility.
An assessee can also make payment of taxes from the account of any other person. However, the challan for making should indicate the PAN of the assessee on whose behalf the payment is made.