Form 16 is the certificate of deduction of tax at source and issued on deduction of tax by the employer on behalf of the employees. It provides employees details of TDS deducted from their salary that is paid during a particular financial year, tax exempt allowances etc. The income tax law says a taxpayer must receive his/her Form 16 from the employer by June 15. So once you receive Form 16 from your employer, the very first thing you should do is reconcile it with Form 26AS.

 

Basically, Form 26AS statement gives you a consolidated view of the total income earned as a deductee from various sources. It also includes the TDS/ TCS amount that has been deducted from your income and paid to the Income Tax (IT) Department.

 

As the June month is about to end, most companies have issued or are about to issue Form 16 to their staff. The first step in filing ITR is to reconcile Form 26AS with Form 16. If there are discrepancies in the figures quoted in the two documents, they need to be rectified.

 

Sometimes, if the employer fails to deposit the amount with the I-T department on time, it is likely that TDS mentioned in Form 16 or 16A will not match with Form 26AS. To be able to file your ITR, it is essential that tax credit in Form 26AS and Form 16 should be the same. One can login to TRACES website to check whether the Form 26AS matches with Form 16 or not.

 

'TRACES' stands for TDS Reconciliation Analysis and Correction Enabling System. It is a website where a PAN holder can view the taxes that have been deducted and deposited against his/her PAN during a financial year.

 

  

The first and foremost thing you must check in your Form 16 is that the PAN mentioned in the form matches with yours. Form 26AS is your tax passbook. It consists of all the taxes that are deducted and deposited against your PAN by your employer, bank or any other entity. Any advance tax and self-assessment tax deposited by you against your PAN will also be reflected in your Form 26AS.

 

The next thing to check is Part A of Form 16. It consists of the summary of taxes deducted by your employer. Part A consists of your name, address, PAN and your employer's TAN and PAN and quarterly summary of taxes deducted and deposited with the government against your PAN in each quarter.

 

Part B of Form 16 consists of the details of income paid to you by your employer. The income details given in Form 16 are detailed and extensive. The format in which details are required to be mentioned in the ITR 1 is same as given in Form 16. Therefore, taxpayers are required to just copy the details from Form 16 and paste it on the required fields of ITR 1.