According to the new income tax slab announced in Budget 2020, individuals with an annual income of up to Rs.2.5 lakh annually are not liable to pay any taxes. This amount comprises of incomes from every source.
However, if an individual’s income form salary within a financial year crosses the basic exemption limit of Rs.2.5 lakhs, then his/her employer is required to apply TDS as per the Income Tax Act. It is also the responsibility of the employer to deposit that deducted amount with the government.
Form 16 is a certification of this TDS payment. Employees can avail this form from their employer. Tax deductors can opt for Form 16 download from the official website of the Income Tax Department.
What is Form 16?
As mentioned earlier, it is a TDS certificate issued against the tax deduction on salary. This form proves that an employee has already paid his/her taxes to the employer, and they have submitted it to the respective authorities. It contains a detailed break up of their income, and the taxes levied on it.
This certificate is issued under Section 203 of the IT Act. It is issued annually by the employer at the end of each financial year
Employees can use this form to gather the necessary information while filling up their income tax return.
When is it issued?
Every company is required to issue this form before 31st May of the respective assessment year, so that, employees can file their IT return on time.
A financial year is a period between 1st April and 31st March, which employees earn their salaries and incomes. On the other hand, the assessment year is the next year in which their incomes are calculated and taxed.
Employees cannot download Form 16 online, unlike the deductors. The former can only avail it from the latter.
This form acts as an income proof document. Financial intuitions require it when approving loans and credit cards. If not submitted, it could be one of the reasons why they may have declined a credit card.
How to perform Form 16 download?
Individuals must know that this form is generated if they have a valid PAN. In case of an invalid one or if it is not mentioned in the TDS statement, they cannot download it.
Steps to download Form 16 –
- Step 1: Login to the TRACES website using user ID, password, TAN and verification code.
- Step 2: Check the return status for the financial year.
- This request will process if the status is either “Processed With Default” or “Processed Without Default”. To check this status, go to “Statement/Payment” tab and then choose the financial year and form type.
- Step 3: Click on “Form 16” option under the download tab.
- Step 4: Choose the financial year and select either “Search PAN download” or “Bulk PAN downloads”.
- Step 5: The details to be printed on the form will appear on the screen now. If everything is in order, then click on “Submit” to proceed. In case of any changes required, click on “Cancel” and go to the profile section to update details.
- Step 6: Fill up the KYC details via either digital signature process or conventional process.
- Step 7: On successful submission and unique “Request Number” will be generated, which can be used in future to track the status of this application.
Individuals can perform their Form 16 download one it is in “Available” status. However, if it is in “Submitted” status, they should wait for 24-48 hours for it to become available.
Financial institutions emphasise submitting this document along with others as it helps them judge the repayment capability of an individual. Failing to submit this is one the reasons why a credit card application can be rejected.
NBFCs usually require this certificate along with a few other documents to approve credit cards. One such example is the Bajaj Finserv RBL Bank SuperCard, which applicants can opt for via minimum paperwork.
This credit card comes with several industry-first features, a zero-interest emergency personal loan being one of them. There are several reasons individuals can avail a personal loan on a credit card.
Bajaj Finserv also brings forth pre-approved offers, which makes the process of availing finance time-saving owing to a straightforward process. These offers are available on credit cards as well as business loans, personal loans, etc. Individuals can check their pre-approved offers by submitting essential contact details.
Filing income tax within the deadline is very important, and Form 16 India is prerequisite here. It contains the necessary information to streamline this process. Thus, it is necessary to avail this document from the respective employers.