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The Financial Planning Newsletter   [Issue 17]                                                       July 19, 2011

If you are an employee, then by now you should have received your Form 16. This form is important to you from the tax filing point of view, as it shows how much TDS has been paid on your behalf by your employer through the year, by deducting it from your salary on a monthly basis. This form is your proof of TDS.

However not everyone understands or even goes through their Form 16 to see if everything is correct. Let's go through the different components of this very important form, and we'll see how simple it all really is.

Components of your Form 16

The first page of your Form 16 will begin with relevant details under Part A, such as:

  • Your employer's name and address
  • Your employer's Permanent Account Number (PAN) and Tax Deduction Account Number (TAN)
  • Your name and designation
  • Your PAN
  • Which year the Form 16 is for (for the period 01/04/2010 to 31/03/2011), as per assessment year 2011-12

It will move on to provide a tabular summary of your tax deducted per quarter. The tax deducted by your employer and the tax remitted by your employer on your behalf should be equal. If the company you are working for deducts tax from you, and does not pay it to the Government on time, then the company has to pay 1.50% interest per month of delayed payment. Even if the company does not deduct tax from you or accidentally deducts less tax from you than it should, it still has to pay tax to the Government, which it will then recover from you.

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