In simple language, Form 16 is an important tax-related document, which companies issue annually to all salaried people. Form 16 contains all the details related to the income given to the employee. Along with this, Form 16 contains information about Tax Deducted at Source (TDS) along with tax-saving investments and deductions used by the employee for a particular financial year.
Under the Income Tax Act, of 1961, it is necessary to provide Form 16 to all those employees whose annual income is more than Rs 2.5 lakh. Companies or employers give Form 16 to employees by June 15 every year. If you have worked with multiple companies in a financial year, then you will have to collect Form 16 from both employers.
Why is Form 16 important?
Form 16 and the details contained in it are very important for the employees to file income tax returns. In this form, you get completely accurate information about your salary and the tax you pay. It acts as proof that tax has been paid to the government on your behalf. While filing taxes, you have to provide Form 16 as definite proof of your income and taxes.
Apart from this, Form 16 can also be used as proof of income while applying for a loan or credit. Form 16 is also necessary to verify that the tax paid by you is correct. Apart from all these things, Form 16 can also be used as a supporting document during visa processing. Overall, Form 16 is a very important document for all salaried employees.
How is it different from Form 16A?
Sometimes people confuse Form 16 and Form 16A as the same. Do not make such a mistake at all. Though Form 16A is also a TDS certificate, it is not issued by the companies to the employees.
