Financial Fridays: Some forms you should know

I’m going to start Financial Fridays (which I hope to make a regular addition to my blog) with a quick discussion about some important forms that most people who come under the Indian income-tax purview receive. If you know what these forms are, perhaps taxation won’t seem as complicated as it’s made out to be:

Form 16

Simply put, the Form 16 is a certificate, issued by the employer to the employees, for tax deducted at source (TDS) during the financial year (April to March) on salary. It is mandatory for employers to issue this form to employees who are required to pay tax during the financial year. Currently for a resident less than 60 years, the threshold is taxable income above 2,00,000 per annum. The form details the amount of salary that was paid to you and the amount of tax that was deducted on your behalf during the said year. You need to use these details when you file your income-tax return every year.

Form 12BA

Also related to salary, Form 12BA is a statement issued by the employer specifying the value of various perquisites (perks), fringe benefits and amenities provided to employee and the tax deducted thereon.

Form 12B

Form 12B is another form related to salary and is given when an employee leaves an organization during the middle of the year. It certifies the total income (salary, allowances & perquisites) paid & tax deducted thereon from the beginning of a financial year till the date of termination of services. Employees have to give Form 12B to their new employers so that the annual tax payable can be computed correctly and TDS can accordingly be made correctly. Form 12B is required to be given by the previous employer even if no tax was deducted at source.

Form 16A

Much like the Form 16, Form 16A is also a certificate, issued by a deductor of tax to the deductee, for TDS on any income other than salary. This would include interest income, rental income, consulting fees and so on.

Form 26AS

Form 26AS is an annual statement which can be viewed on the income-tax website. It provides details of ALL the taxes that have been deducted on your behalf by different persons (employers and others too) during a particular financial year. By reconciling the details mentioned in this form and the Form 16 and Form 16As, you will be able to find out whether you have received credit correctly for all the tax that has been deducted at source.

If you have any questions about any other forms, I’d be happy to take them 🙂

******

My first post comes with a whole lot of contribution from Karthik Kini, a good friend of mine who has been pushing me to do this. In fact, most of the hard work is his so, if you’ve learnt anything today, you know who to thank! 🙂

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6 comments on “Financial Fridays: Some forms you should know

  1. Meena Menon says:

    U can bet I will give it a miss ;). These are too much for my comprehension…..

    Like

    • Preeti says:

      That is exactly why I tried to start this finance thing with something really basic Meena. Trying to debunk the myth that tax is complicated!
      Spend a couple of minutesreading my post and you will realize it is not as complex as you think! 🙂

      Like

  2. mahabore says:

    Nice simple topic to start with, good going with the first Financial Friday post…:)

    Like

  3. Excellent initiative!
    You’ve described the various forms in simple language without jargon. The links are useful.

    Like

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