The Central Board of Direct Taxes (CBDT) has made it mandatory for all deductors to issue the TDS certificate in Part B of Form no. 16 (TDS on salary) by downloading it through TRACES Portal. This will be applicable in respect of all sums deducted on or after April 1, 2018 under the provision of Section 192.
Form 16 is a certificate issued by employer to employees showing details of salary, allowances , perquisites given to the employees and saving details claimed by such employees from employers as per income tax rules , along with the details of the Tax deducted at source by the employees from the salaries of the employees.Form 16 is required to be provided on yearly basis to all employees by 15 June after the end of respective financial year.On the basis of information given in Form 16 by employer , employees file their Income tax return to income tax department
Form 16 has Two Parts
- Part A: has a details of the amount paid ,TDS deducted from Salary and TDS deposited , and was made mandatory to issue PART A of form 16 after downloading the same from TRACES portal since 2012
- Part B: contains details of salary break up ,exempted allowances , perquisites , deduction and rebate allowed to the employees along with tax due and tax deducted (total) .The part was earlier allowed to be prepared by the employer but now it is mandatory for employer to download part B also from the Income tax TRACES portal and issue downloaded form.
Form 24q is filed by employer to Income tax department on quarterly basis . In first there quarters of the year only amount paid and tds deducted is filed but in q4 another annextre is also to be filed under which details of the salary of full years ,showing details of the allowances paid and deduction /rebate claimed//allowed to the employees is required to be filled.
Both form 16 and Form 24 has been amended vide notification 36/2019 dated 12/04/2019 and all the columns of form 16 and Form 24 has been made same with each other except Form 2t and 10k of the form 16.
- Form 2t is for misc exemption under section 10 of Income Tax Act to be specified by the employer from case to case basis for which is not provided in form 24 but total of form is given
- Form 10k is for deductions allowed under section 80C to 80U not specified in the form 16 and specific column has not be given in form 24 but total of all deduction is given in form 24
As you may know that TRACES will generate form 16 Part B on the basis of annexure ii of form 24 or Q4 ,so column no 2t and 10k remains blank in generated form ,which is required to be filled manually ,where ever required , by the employer before issuing the form to the employee.
The new procedure is a welcome step ,which must be adopted a earlier, but we can say that late is better than never.However in our view income tax department must provided columns for 2t and 10k also in form 24 so that no further manual data entry is required from employer's end. Further the form 16 must be provided to taxpayer digitally by Income tax department as like form 26AS from Income tax website.
Government of India
Ministry of Finance
Central Board of Direct Taxes
Directorate of Income-tax (Systems)
Notification No. 09/2019 New Delhi, 06'th, May, 2019
Subject: Procedure, format and standards for issuance of certificate for tax deducted at source in Part B of Form No. 16 in accordance with the provisions of section 203 of the Income-tax Act, 1961 read with the Rule 31 of the Income-tax Rules, 1962 through TRACES- reg.
Section 203 of the Income-tax Act .1961 ("the Act") read with the Rule 31 of the Income-tax Rules 1962 ("the Rules") stipulates furnishing of certificate of tax deduction at source (TDS) by the deductor to the deductee specifying therein the prescribed particulars such as amount of TDS, valid permanent account number (PAN) of the deductee, tax deduction and collection account number (TAN) of the deductor, etc. The relevant form for TDS certificate in case of deduction under section 192 of Chapter XVII-B of the Act is Form No. 16 which is to be issued annually. TDS Certificate in Form No 16 has two parts viz. Part A and Part B (Annexure). Part A contains details of tax deduction and deposit and Part B (Annexure) contains details of income.
2. Vide Central Board of Direct Taxes Notification No. 36/2019 dated 12.04.2019, 'Part B (Annexure) of Form 16' and 'Annexure II of Form no. 24Q' in Appendix II to the Income tax Rules, 1962 have been amended.
3. In exercise of the powers delegated by the Central Board of Direct Taxes, under sub-rule (6A) of Rule 31 of the Income-tax Rules, 1962, the Principal Director General of Income-tax (Systems) hereby specifies the procedure, formats and standards for the purposes of generation and download of certificates from "TDS Reconciliation Analysis and Correction Enabling System" or (https://www.tdscpc.gov.in) (hereinafter called TRACES Portal), as below:
3.1 ISSUE OF PART B OF FORM NO. 16 FOR DEDUCTION OF TAX AT SOURCE MADE ON OR AFTER 1st day of April, 2018:
All deductors (including Government deductors who deposit TDS in the Central Government Account through book entry) shall be able to issue the TDS certificate in Part B of F orm No. 16 (by generation and download through TRACES Portal) in respect of all sums deducted on or after the 1st day of April, 2018 under the provisions of section
F. No: ProDGIT(S)/CPC(TDS)/Notification/Part-B Form16/2019-20
192 of Chapter XVII-B provided that the relevant TDS statement for the fourth quarter i.e. Form 24Q is furnished along with duly filled in Annexure II of Form 24Q as substituted vide Central Board of Direct Taxes Notification No. 36/2019 dated 12.04 .2019. To ensure generation of accurate TDS certificate in Part B of Form No. 16, the deductor(s) need to report correct data in Annexure II of Form 24Q. The TRACES generated Form No . 16 shall have a unique TDS certificate number.
3.2 AUTHENTICATION OF TDS CERTIFICATE IN FORM NO. 16:
The deductor, issuing the TDS certificate in Form No. 16 by downloading it from the TRACES Portal, shall, before issuing to the deductee authenticate the correctness of contents mentioned therein and verify the same either by using manual signature or by using digital signature in accordance with sub-rule (6) of Rule 3 1.
3.3 'Part B (Annexure)' of Form No. 16 item nos. 2(f) and lOCk):
The item nos. 2(t) and 10(k) in Part B (Annexure) of Form 16 required to be filled -in by the deductor manually shall be made available at the bottom of the TRACES generated Form 16 (Part B) and the deductor shall duly fill details, where available, in item numbers 2(t) and lOCk) before furnishing of Part B (Annexure) to the employee. The deductors who opt to authenticate Part B of Form No . 16 manually will be provided with the download of the Part B of Form No. 16 along with these item nos. 2(t) and lOCk) appearing at the bottom of the Form . The deductor shall duly fill details, where applicable, in item numbers 2(t) and 10(k) before furnishing of Part B (Annexure) to the employee. The deductors who opt to authenticate Part B of Form No. 16 using Digital Signature Certificate (DSC) will be provided with the download of Part B of Form No. 16 without item nos. 2(t) and 10(k) and therefore these details shall be required to be prepared by the employer and issued to the employee, where applicable, before furnishing of Part B to the employee.
3.4 Sub rule (3) of Rule 3 1 of the Income tax Rules, 1962 prescribes the time limit for issuance of Form 16 by the deductor to the employee. Currently, Form 16 should be issued by l5 th June of the Financial Year immediately following the financial year in which income was paid and tax deducted.
4. This issues with approval of the Principal Director General of Income-tax (system~s).