Form 16/16A is a mandatory TDS certificate issued by the employer to the employees.
This certificate of deduction of tax at source and issued on deduction of tax by the employer on behalf of the employees. These certificates provide details of TDS / TCS for various transactions between the deductor and deductee. It contains two parts, Part A & Part B. (what are forms-16-16a-16b-26as-27a-27b how are they different)
- It is a vital document for employees to file their returns.
- The employer must issue Form 16 annually by June 15th of the following financial year after deducting tax.
- If the employee’s salary does not exceed the basic exemption limit, employers need not issue a Form 16 to those employees.
- All salaried employees, irrespective of whether they receive their Form 16 or not, must file their annual IT returns
The Income Act states that companies paying salaries must deduct tax at source on the compensation paid. According to this act, every person who deducts TDS from a payment made should provide the employee with a TDS certificate (Form 16).
This certificate specifies that the employer paid the tax to the Income Tax Department – Central Government every quarter for which they deducted the tax, along with other particulars.
When the employer defaults to provide the employee with a Form 16 after having deducted TDS – the minimum penalty that the employer will pay is Rs. 100 every day till the default continues. An employee can report the employer’s failure to the Assessing Officer, who can take action, including penalties and further proceedings.
Employees can check Form 26AS, which will have details of TDS deducted by their employer while checking TDS details. If the details don’t show up, well it means the employer deducted TDS from you and didn’t pay to the Income Tax Department. In this case, employees shall pay tax to the government on income earned and later claim from the employer.