Form 16 Issuance

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Form 16 issuance

An employer paying a salary is required to deduct tax at source under section 192 of Income Tax Act, 1961, on the salary payable and issue Form 16 to the employees at the end of each financial year. We can assist you in managing your TDS compliance through our platform efficiently. After subscribing to our services, our team will help you to:

File TDS returns (Form 24Q) for all four quarter
Complete guidance in depositing TDS
Keep you updated with the amendments and latest circulars to avoid penalties.
Issue Form 16 to your employees at year-end.

What is Form 16?

Form 16 is a vital document for a salary taking individual, especially if the employer has deducted tax on his/her income. Form 16 is basically a certificate provided by the Employer to the employee displaying the amount of tax deducted from the salary income and deposited with the Government. When an employee files his income tax return, Form 16 helps him to see how much tax has already been paid and to avail the credit for the same while filing the Income-tax return.

Structure of Form 16:

Form 16 comprises of 2 major parts, i.e. Part A & Part B.
Part A of Form 16 gives the following summary:
Personal details of the employee as well as the employee
- The name of the individual and the Employer
- Address details
- PAN details of both (employee and Employer)
- Employer’s TAN details.
Assessment year
The period for which the employee was employed with the employer/organisation in the concerned Financial Year.
The date at which tax was deducted from salary & deposited to Government
Quarterly summary of tax deducted and deposited
Acknowledgement Number of the TDS Payment

Form 16 Part B is a consolidated statement covering the following details:
Salary received (i..e total salary as per salary structure of an employee)
Exemptions allowed by Employers such as Conveyance, HRA, children’s education, hostel expenditure, medical expenditure, etc.
Chapter VI-A deductions
Gross Income (i.e. the sum of the total salary received from the Employer and any other income declared by the employee.)
Net Taxable Income (i.e. total deductions are reduced from the gross income)
Education Cess and surcharges, rebate and reliefs u/s. 89
The tax payable, TDS and the balance tax due/refund applicable

Rate, Deduction & Deposit Of TDS On Salary By Employer To The Government:

Rate of TDS
In case of TDS rate on salary, there is no as such fixed rate specified; however, the Employer is required to deduct the tax at a source at the average rate of income tax if the total income of the employee exceeds the basic exemption limit based on the other income details provided by the employee.
Time of deduction of TDS
The Employer is required to deduct TDS at the time of payment of salary and not on an accrual basis.

Time of deposit of TDS

Type of TDS Deductor	Time Limit
Non-Government (i.e. normal Employer)	Within 7 days of the subsequent month in which TDS is deducted. For the month of March, on or before 30th April.
Government employer	Same day – If sum deducted has been paid without production of Challans. Within 7 days of the subsequent month in which TDS is deducted - If Income tax challans are generated for the deposited tax.

TDS Returns By Employer

The Employer has to file the details of salary paid, TDS deducted on such payment to its employees in Form 24Q. The compliance of form 24Q is to be done quarterly.

Further, 24Q consists of 2 annexures – Annexure I and Annexure-II.

Annexure I has to be submitted by the Employer for all 4 quarters of an FY.

Annexure II, unlike Annexure I, is not required to be submitted for the first three quarters but only for the last quarter (i.e. 4^th quarter).

Due Dates Of TDS Returns

Quarter	Due dates
Q1 – April to June	31^st July
Q2 – July to September	31^st October
Q3 – October to December	31^st January
Q4 – January to March	31^st May

Note: The due date to file TDS return in Form 24Q for the Q1 & Q2 for the FY 2020-21 is 31st March 2021.

Issuance Of Form 16 To Employees:

After filing TDS returns for salary, TDS certificates are issued by the Government to the Employer – which are further provided to the employee.
However, the issuance of form 16 has a due date of 15th June of the immediately following the financial year in which the tax is deducted hence the Employer is obliged to provide the Form 16 to its employee on or before the due date.
Whenever there are any updates to be made in the details/particulars submitted in Form DIR 3, the DIN holder is required to provide an intimation of such updates to the Central Government.
To update the existing details, Form DIR- 6 is used. The DIN holder is required to fill the Form DIR-6, verify it using DSC and get it signed digitally by the practising CA or CS or CMA before submitting the Form.

Late Fee/Penalties Associated With Form 24Q:

Interest
- TDS not deducted by Employer- 1% per month or part of a month from the due date of deduction to actual date of deduction.
- TDS deducted but not deposited- 1.5% per month or part of a month from the date of deduction of tax to date of actual payment.
Late Filing Fees
Fine of ₹ 200 per day will be levied until the return is filed. However, the late fees shall not be more than the total amount of TDS.
Penalty
Assessing Officer may charge penalty not less than ₹10,000/- which may extend to ₹ 1,00,000/-

FAQs

a. What is section 192 in income tax?

Section 192 in the income tax highlights the provisions regarding deduction of tax on salary income at source. As per the provisions, the Employer at the time of paying salary to his employee is required to deduct tax at source TDS.

b. If no TDS is deducted, is Employer required to issue a Form 16?

TDS certificate in Form 16 is issued when TDS has been deducted. In case no TDS has been deducted by the Employer, Form 16 may not be issued.

c. Is advance salary liable for TDS?

TDS on salary is liable for deduction at the time of payment of salary. Similarly, in the case of advance salary, the TDS is to be deducted at the time of payment of advance salary and not when the salary is due.

d. What happens if TDS is deducted but not deposited by the Employer?

Suppose TDS deducted is not deposited by the Employer. In that case, the Employer is liable to pay interest for late deposit @ 1.5% per month from the date on which tax was deducted till the date on which TDS was deposited to the credit of the Government.

e. Still have doubts?

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