It 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 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.
- Shall be issued by the employer, once in a year, on or before 15th June of the financial year immediately following the financial year in which tax is deducted.
- 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
What happens when the employer deducts TDS and does not issue form16.
Companies paying salaries are required to deduct tax at source on the salary paid. The Income Act says that every person who deducts TDS from a payment made must furnish a certificate to the employee (a TDS certificate – Form 16) specifying that the tax has been paid to the Income Tax Department – Central Government, every quarter for which the tax has been paid 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 write about this failure of the employer to the Assessing Officer who can take appropriate action against the employer, including levying penalty and also carrying out further proceedings against the employer.
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.