Under Section 203 of Income tax Act, 1961, Every employer whether in Government sector or in private sector, is required to issue in form 16, a certificate for tax deducted at source (TDS) from salary. The Form 16 contains the computation of the income, allowable deductions and rebates, income-tax payable along with details of tax deducted and deposited by the employer.
Union Budget has made the following changes that would affect the computation in Form 16:
1. Change in the income tax slabs. The basic income tax slab has been raised to Rs. 2.50 lacs.
2. Investment Limit u/s 80C has been enhanced to Rs. 150000/- .
3. The limit for claiming deduction for interest paid on housing loan for self occupied house has been raised to Rs. 2.00 lacs.
Issue of Form 16
As per CBDT Circular No. 04/2013 dated 17 th April, 2013, issue of form 16 for deduction of tax at source made on or after 01-04-2012 shall be in two parts as under:
Part A of Form No. 16 contains the details of the tax deposited and is required to be downloaded from TDS Website (TRACES), and can be issued by the employer by manually signing or under a digital signature . Thus , Part A of Form No. 16 shall be issued by all the deductors, only by generating it through TRACES Portal and after duly authenticating and verifying it.
‘Part B of the Form contains the computation of the total income of the employee including the details of deductions and rebates allowed. Form 16 is required to be prepared by the deductor/employer manually and issued to the deductee employee alongwith the Part A of the Form No. 16.
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It automatically calculates the amount of allowable deductions under Chapter VIA, rebate u/s 87A and applicable income tax .