Jul 188 min read

Form 16 Verification: An Essential Guide for Salaried Employees

Your employer will give you a TDS certificate on Form 16 after each financial year. The certificate shows the pay you received for a certain financial year along with the amount of tax deducted (TDS). To file your income tax return (ITR), you must have Form 16, however, it's crucial to make sure the form is genuine and valid. To learn more about Form 16, its components, and how to verify its legitimacy, read this article. It offers a close view of the verification process for Form 16, and every employee should be aware of it.

Table of Content

What is Form 16?

Purpose of Verification of Form 16

What Should Employees Do After Getting Form 16?

How to Verify Form 16: Steps for Form 16 Online Verification

Conclusion

Most Asked Questions

What is Form 16?

The certificate that the employer issues on behalf of the workers is Form 16/ 16A. The tax deduction at the source certificate is what it is. These certificates must be given to the taxpayers (workers). The deadline for businesses to provide Form 16 to workers is June 15th, according to income tax regulations. For salaried individuals filing their income tax return (ITR), Form 16 is a crucial document. An employee can learn how much they made in salary income during the preceding fiscal year and how much tax was withheld from their pay by referring to their TDS certificate.

Details of TDS and TCS for numerous transactions between the deductor and the deductee are included in the certificate. Form 16 comprises two parts:

Part A: Name, address, PAN, and TAN of the employer are all included in Form 16 (Part A). It also displays information such as the name, address, PAN, TDS, and quarterly salary paid to the employee.
Part B: Information on taxable pay, pension, allowances, deductions, and tax liabilities is included in Part B of Form 16. This portion of Form 16 is created by the employer on behalf of the workers.

Now that you are familiar with the fundamentals of Form 16, let's talk about the need to confirm its legitimacy before submitting an ITR.

Purpose of Verification of Form 16

The Income Tax Act mandates that an employer provide a Form 16 when deducting taxes from an employee's salary at the source. Form 16 is a crucial document that serves as the foundation for an employee's income tax returns. All of an employee's salary transactions, including tax deductions, are listed on Form 16. Verifying Form 16 helps pinpoint a candidate's precise pay for a certain year. Employers are free to choose a candidate's appropriate remuneration if the Form 16 check results and the candidate's claims regarding prior compensation match. An excellent foundation for job verification can also be found in a green Form 16 verification case.

What Should Employees Do After Getting Form 16?

Three things salaried workers need to undertake following receipt of Form 16:

Examine and confirm the data: A salaried person should carefully review Form 16 to make sure all the information is correct. This comprises your personal data (PAN and address), employer details (name and address of the employer), salary breakdown (base pay, any benefits received, like house rent allowance or special allowance), tax regime chosen (TDS on salary), and any deductions made in accordance with the tax regime selected.
Compare with Form 26AS: A salaried person should download both Form 26AS and his or her Annual Information Statement (AIS) from the income tax department's website after obtaining Form 16. All of the income that the salaried person received during the preceding fiscal year, along with any taxes withheld, is disclosed by AIS. Incomes are displayed by AIS even in the absence of any tax deduction. A combined view of all the taxes deducted at source by all deductors—including your employer—is available on Form 26AS. To find any differences, the TDS data in the three documents should be compared. You will be able to claim the tax amount shown on Form 26AS in your ITR if there is any mismatch.
Address Discrepancies (if any): Get in touch with your employer's finance or HR department to fix any discrepancies that exist between Form 16 and Form 26AS/AIS. To update the information, they might provide an amended TDS return. The employer must provide a revised Form 16 after the mistakes are fixed. Keep in mind that the deadline for filing income tax returns for FY 2023–24 (AY 2024–25) is July 31, 2024. Therefore, to obtain the revised Form 16, errors must be fixed as soon as possible. The income tax returns deadline for FY 2023–24 (AY 2024–25) is July 31, 2024. Therefore, in order to get the amended Form 16 on schedule, errors must be fixed as soon as possible.

How to Verify Form 16: Steps for Form 16 Online Verification

Form 16 must be signed by your employer before it can be sent to you electronically. The form is typically signed with a digital signature certificate (DSC) from an authorised signatory, which may include the CEO, CFO, HR, or Payroll head. For this reason, it's crucial to confirm the accuracy of the information on your Form 16 and to verify the legitimacy of the DSC. There are several methods available from the income tax department to verify the legitimacy of Form 16. As of the 2011–2012 fiscal year, taxpayers have access to the online verification process. You can accomplish this by visiting the TRACES website and entering information such as the employee's PAN and employer's TAN, the TDS certificate number, the assessment year, and the amount of TDS deducted in accordance with the certificate and source of income. Here are the steps to verify Form 16 online:

Step 1: Go to the income tax portal's official website.

Step 2: Enter your PAN as your username and password to log in.

Step 3: After logging in, select "View 26AS" under "Income Tax Returns" under the "e-file" tab.

Step 4: You will then be sent to the TRACES webpage.

Step 5: Select the "View Tax Credit" tab after being taken to the TRACES website.

Step 6: In the next step, select "Verify TDS Certificate."

Step 7: Complete all the necessary information, including the employer's TAN, the TDS certificate number, the assessment year, the amount of TDS deducted in accordance with the certificate, and the source of income (salary & non-salary). All of these details—aside from the source of income—are included in Form 16 (Part A).

Step 8: After choosing your income source (salary or non-salary) from the drop-down menu on the page, click "Validate" to verify the legitimacy of your Form 16.

Step 9: The information on your Form 16 or TDS certificate will match that on the website if it is valid.

Should the website indicate that your Form 16 or TDS certificate is fraudulent or invalid, get in touch with your employer right once and request that the Form 16 or TDS certificate be corrected. It is required to confirm the legitimacy of additional information on Form 16 as well as the authenticity of the digital signature certificate (DSC) on Form 16. Consequently, to confirm the legitimacy of the digital signature, follow these steps:

Open your Form 16 in Adobe Reader. Then, right-click on the form's last page's digital signature.
After that, select "Validate Signature," and the document will indicate whether or not the signature is legitimate.

The aforementioned procedures will assist you in verifying the legitimacy of your Form 16. Before filing your ITR, make sure that your Form 16 has been validated or confirmed.

Conclusion

The salaried person can begin getting ready to file an ITR after the data in Form 16 has been examined and confirmed. For the purpose of completing an ITR, salaried individuals should gather additional documentation in addition to Form 16, such as bank statements, interest certificates, capital gains statements, and evidence of claimed tax deductions.

FAQ

Q1. Do all employers need to issue Form 16 to their employees?

Form 16 must be given by employers to employees whose taxes were withheld within a specific financial year. However, if Tax Deducted at Source (TDS) has not been paid for any employees, the employer is not permitted to give them Form 16.

Q2. What happens if Form 16 is not provided by the employer?

If your employer deducts TDS but fails to give employees Form 16, they will have to pay a minimum penalty of Rs 100 per day as long as the default persists.

Q3. Can I get Form 16 without TDS?

Employees who had numerous employers or changed employment and had their taxes withheld from each one will need to obtain a separate Form 16 from each of them. Form 16 will not be issued, nevertheless, if an employee's pay is less than the tax exemption threshold and no TDS is withheld.

Q4. How can you verify Form 16 online?

It is not possible to check your Form 16 online directly. The form can only be downloaded by your company from the TRACES website. On the TRACES website, you can also see some of the same information that appears on your Form 16.

Q5. What is the salary limit to issue Form 16?

Employers who deduct TDS are obligated by law to provide Form 16 by June 15 of each year.

Q6. How is Form 16 handled when you change a job during the financial year?

Salaried people who changed positions within the financial year are required to obtain Form 16 from each employer. An employee's AIS and Form 26AS will show their total salary income from all of their employers, including any taxes withheld. Following the above-mentioned procedures, these TDS certificates should be examined and validated when Form 16 from each employer has been obtained.

Q7. What is Form 16 and why is it important for salaried employees?

Form 16 is a certificate issued by an employer, summarizing the salary paid and the TDS (Tax Deducted at Source) deducted during the financial year. It is crucial for salaried employees as it serves as proof of income and TDS for filing income tax returns.

Q8. How can an employee verify the accuracy of Form 16 issued by their employer?

Employees can verify Form 16 by cross-checking the details with their monthly salary slips, checking the TDS amount against the figures in the Form 26AS (available on the Income Tax Department’s website), and ensuring that all income and deductions are correctly mentioned.

Q9. What should you do if there are discrepancies in your Form 16?

If there are discrepancies in Form 16, employees should immediately bring it to their employer's notice for correction. If the issue persists, they can seek assistance from the Income Tax Department or a tax consultant to resolve the discrepancies.

Q10. Is it necessary to attach Form 16 while filing your income tax return?

While it is not mandatory to attach Form 16 when filing your income tax return online, it is essential to use the information provided in Form 16 to accurately fill in your return details. It serves as a reference document for the data you input.

Q11. How does Form 16 help in the verification of tax credits claimed during filing returns?

Form 16 helps in the verification of tax credits by providing a detailed breakup of salary, exemptions, deductions, and TDS. This data can be matched with Form 26AS to ensure that the tax credits claimed while filing returns are accurate and consistent.

Q12. What are the key components to check in Part A and Part B of Form 16 during verification?

In Part A, check the employer’s and employee’s details, TAN of the employer, and summary of TDS deposited. In Part B, verify salary details, exemptions, deductions under Chapter VI-A, and the net taxable income.

Q13. How can you obtain Form 16 if your employer has not issued it?

If an employer has not issued Form 16, employees should request it directly from the HR or payroll department. If the employer still does not provide it, employees can use their payslips and Form 26AS to file their tax returns.

Q14. What role does Form 16 play in the case of multiple employers in a financial year?

If an employee has worked with multiple employers in a financial year, they should collect Form 16 from each employer. During verification, aggregate the income and TDS from all Form 16s to ensure the correct total income and tax deducted is reported.

Q15. Can errors in Form 16 impact your income tax return filing?

Yes, errors in Form 16 can lead to incorrect income tax return filings, potentially resulting in notices from the Income Tax Department for discrepancies. Accurate verification of Form 16 ensures proper tax reporting and avoids legal hassles.

Q16. How often should you verify your Form 16 and what is the best time to do so?

Form 16 should be verified annually, ideally immediately after it is issued by the employer and before filing the income tax return. This allows ample time to address any discrepancies and ensures accurate tax filing.