In my earlier posts, I have explained about what is form 16 and form 16a. This is not very difficult for everyone to understand, it is just an document you will be using for filing the income tax returns. Hundreds of readers have posted very basic questions about the topic without reading the complete article, I have decided to post another article on the same topic with the questions and answers type. This would be much better to understand everyone. This list itself not a complete one, if some one asks questions, the list will keep updated. I have tried answering most of the basic questions about form 16. If you still have questions, please write it in the comments section. If you are interested in receiving the future articles about investments, please subscribe here.

Form 16

1. What is form 16?

If you are salaried employee in an organization, a certificate or document issued to you after the completion of financial year which contains the tax deducted on your salary. In other terms, it Tax Deducted at Source (TDS) from your salary. This document simply reveals the total tax deducted from your salary by your employer with some more details like the data of the tax deducted and the reference number for that deduction (read more).

2. Is it compulsory for a company to issue form 16?

No. If an employee doesn’t pay any tax for the financial year, there is no compulsion for the company to issue the form 16. In most cases company may not issue form 16 for that employee. Even if it issues, there is no use for that document since there is no tax deduction.

3. When form 16 is issued to employees?

Form 16 is issued by organizations to all employees after the completion of a financial year. For example, employee will receive the form 16 for financial year 2012-13 at the beginning of financial year 2013-14. It may be April or May. It is that organization’s responsibility to send the form 16 to all the employees.

4. How many form 16 will be issued for each year?

If you are working for a company in the current financial year, there will be only one form 16 issued by that particular company. If you have worked on two different companies, you will receive separate form 16 from different companies. These documents collectively used for filing the income tax returns.

5. Tax deducted on my salary. But form 16 is not issued by my company. What should I do to get form 16?

Please check your monthly salary slip for the tax deduction under the head income tax. If so, you have the rights to ask your employer for the form 16.

6. Professional tax is deducted from my salary. There is no income tax deducted from my salary. Will I get form 16?

No. Professional tax is not fall under the category of income tax. There is no relation between professional tax and form 16.

7. Can I include my other sources of income in the form 16?

No. It is only meant for showing the tax deducted from your salary. Your other incomes will not be displayed in this document.

8. Can we file income tax returns without form 16?

Yes. Form 16 is only used as the supporting documnet for filing income tax returns. Income Tax officer will not ask for the document when you are filing the returns. You may file your income tax without this document. You can consider this document as the proof for the payment of tax. In the future date, if there is any questions arises for the tax payment against your PAN details, form 16 will be helpful to show as the proof.

9. What is TDS?

TDS is abbreviation of Tax Deducted at Source (TDS). You need not pay the tax directly to govt. if you are working for a company. Your employer takes the responsibility to pay the tax on behalf of you. The calculated tax will be deducted at your salary. This process is known as Tax Deducted at Source (TDS).

10. If I have form 16, is it compulsory to file the income tax returns?

If your total taxable income is above the prescribed limit of minimum tax slab by the govt. then you have to file the income tax returns. Form 16 is just a supporting document, whether you have that document or not, you are responsible for filing the income tax returns every financial year.

11. What is financial year?

Every country has their own financial year. This will be used for submitting the account statements of companies and paying the income taxes. In simple words, all the monetary transactions are calculated based on this financial year. In India, financial year starts from April  1st to March 31st.

If you still have questions, please write it in the comments section. If you are interested in receiving the future articles about investments, please subscribe here.