TheTaxHeaven Dictionary - Know the meaning of tax


Under the Income-tax Act 1961, employers deduct a set amount of tax (TDS - Tax deducted at source) from employee salaries based on the tax slab rates for that financial year. This is calculated using the employee's projected earnings and investment declarations. 

The TDS deducted is paid to the Income Tax authority. Form 16, issued by the employer, serves as proof. Form 16 should be given to employees by 31st May of the following financial year. 

Part A of Form 16 verifies the amount of tax deducted and paid to the government. It includes the employer and employee's PAN and TAN and the employment period. Employers can download Part A from the TRACES portal. If an employee has multiple employers in a financial year, they receive a separate Part A from each. 

Part B summarizes the employee's salary, other reported income, tax paid, and any tax liability. It outlines income, exemptions, and deductions and includes employee details. It is issued after the financial year and aids in filing income tax returns. 

Learn more about Form-16.