Form 16 is one of the most common and essentially used documents while filing income tax returns.
The norms set by Government of India on levy of Income Tax say that ‘Income from Salary’ is a taxable form of income. It refers to the income of an individual earned in the form of salary in an Employer- Employee relationship.
Whenever the income of a person exceeds the exemption limit set by the Government, the employer deducts the taxable amount and the net result is paid as salary to the employee. This is known as Tax Deduction at Source (TDS).
Form 16 contains month wise distribution of tax deducted by employer from the employee’s salary which the employer pays to the Government. Form 16 is given to all employees for filing income tax return.
Every organization is allotted a Tax Identification Number (TIN) by the Income Tax department. This number is issued to the company personnel who are appointed to deduct tax on payments made to employees.
Form 16 also contains details of all other deductions which are provided from salary of an individual like:
•House rent allowance
• Any allowance granted for encouraging the academic, research and other professional pursuits
•Education allowance for children
•Allowance granted to employee to meet hostel fees of his ward
Visit the tax section of rupeetimes.com to know more about fiing of income tax return.