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The rush to file income tax returns is going to start soon. Generally the last date for filing income tax return is 31st July. In such a situation, if you are employed then you must have heard about Form-16 in your office. This is a very useful document while filing income tax. This form also helps you in saving income tax.
Form 16 is issued by whom?
Form 16 received by any employee is issued by his employer. It contains important information about the employee's salary, tax deductions and tax assessment year. It also contains information about the PAN number of the employee.
What information is available from Form-16?
Form – 16 which is given to you by the employer. That document also contains information about how much tax has been deducted from your salary in a year, that is, how much tax has been deducted at the source of income. In such a situation, when you file your income tax return, you will know from Form-16 how much refund you will get in the end.
System of TDS to facilitate tax collection
TDS has been introduced to facilitate tax collection in the country. The government empowers companies and employers to calculate an employee's income before paying them and deduct tax based on their salary. This is called Tax Deducted at Source – TDS. The company deposits this TDS with the Income Tax Department and after filing the return, you get a refund of the correct amount.
What is under Section 203 of the Income Tax Act, 1961?
Form-16 is an important document issued under Section 203 of the Income Tax Act, 1961. According to Income Tax rules, it is mandatory for the company to issue Form 16 before making payment to the employees whose salary is deducted. Usually this form is given to the existing employees of the company. However, it is also to be issued to employees who have worked for the company in the previous financial year. It is of two types, Form 16A and Form 16B.
What is the difference between 16A and 16B?
Form-16A contains information about the employee's PAN card number and Aadhaar. It contains information about TDS paid by the employee. Form-16B contains details of the employee's income. This includes their salary details and other deductions like your House Rent Allowance – HRA, your savings details etc.
Income tax can be saved through Form 16
Form-16 is the proof of your TDS deposit. Secondly, it gives you a chance to know where you have invested and what are the other places where you can save your income tax by investing. You can plan your tax savings better for the next year.
