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Last modified / updated Feb. 04, 2016

Income Tax Act, 1961 : Income Exempted and Chargeable under the Head "Salaries"


6. Certificate for Tax Deducted (Section 203)

Section 203 requires the DDO to furnish to the employee a certificate in Form 16 detailing the amount of TDS and certain other particulars. The Act stipulates that Form 16 should be furnished to the employee by 31st May after the end of the financial year in which the income was paid and tax deducted. Even the banks deducting tax at the time of payment of pension are required to issue such certificates. The certificate in Form 16 shall specify

(a) Valid permanent account number (PAN) of the deductee;

(b) Valid tax deduction and collection account number (TAN) of the deductor;

(c) (i) Book identification number or numbers (BIN) where deposit of tax deducted is without production of challan in case of an office of the Government;

(ii) Challan identification number or numbers (CIN*) in case of payment through bank.

(*Challan identification number (CIN) means the number comprising the Basic Statistical Returns (BSR) Code of the Bank branch where the tax has been deposited, the date on which the tax has been deposited and challan serial number given by the bank.)

If the DDO fails to issue these certificates to the person concerned, as required by section 203, he will be liable to pay, by way of penalty, under section 272A(2)(g), a sum which shall be Rs.100/- for every day during which the failure continues.

7. TRACES

TRACES is a web-based application of the Income - tax Department that provides an interface to all stakeholders associated with TDS administration. It enables viewing of challan status, downloading of NSDL Conso File, Justification Report and Form 16 / 16A as well as viewing of annual tax credit statements (Form 26AS). Each deductor is required to Register in the Traces portal. Form 16/16A issued to deductees should mandatorily be generated and downloaded from the TRACES portal

8. Particulars pertaining to perquisites (Section 192(2C)

As per section 192(2C), the responsibility of providing correct and complete particulars of perquisites or profits in lieu of salary given to an employee is placed on the person responsible for paying such income i.e., the person responsible for deducting tax at source. The form and manner of such particulars are prescribed in Rule 26A, Form 12BA and Form 16 of the Rules. Information relating to the nature and value of perquisites is to be provided by the employer in Form 12BA in case salary paid or payable is above Rs.1,50,000/-. In other cases, the information would have to be provided by the employer in Form 16 itself.

The certificates in Forms 16 and/or Form 12BA shall be furnished to the employee by 31st May of the financial year immediately following the financial year in which the income was paid and tax deducted. If he fails to issue these certificates to the person concerned, as required by section 192(2C), he will be liable to pay, by way of penalty, under section 272A(2)(i), a sum which shall be Rs.100/- for every day during which the failure continues.

As per Section 139C of the Act, the Assessing Officer can require the taxpayer to produce Form 12BA alongwith Form 16, as issued by the employer.


Links & Description of Contents

Scheme of Tax Deduction at Source from "Salaries"Income Chargeable under - "Salaries"Income Exempted Under The Head "SALARIES"
1 - Section 192 Provisions on Taxable Income
2 - Relief When Salary Paid in Arrear or Advance
3 - Claim of Deduction of Interest u/s 24 (b)- Income from House Property
4 - Due dates for payment of TDS
5 - Interest, Penalty & Prosecution for Failure to Deposit Tax Deducted
6 - Certificate for Tax Deducted (Section 203)
7 - TRACES
8 -Furnishing Particulars pertaining to perquisites
9 - Mandatory Quoting of PAN and TAN
10 - TDS on Income from Pension
11 - Income Chargeable Under the Head "Salaries"
12 - Definition OF "Salary"
13 - Perquisite - Rent Free Accomodation & Motor car provided by the Employer
14 - Perquisite - Gas, electricity & water for household consumption
15 - Interest free or concessional loans
16 - Value of Subsidized / Free food / non-alcoholic beverages
17- Transfer Grant Allowance
18 - Medical Reimbursement by the Employer
19 - Leave Travel Concession (LTC)
20 - Death-cum-Retirement Gratuity
21 - Commutation of Pension
22 - Leave Encashment
23- Retrenchment Compensation
24 - Amount received on voluntary retirement
25 - Sum received under a Life Insurance Policy
26 - Payment from a Provident Fund
27 - House Rent Allowance
28 - Pension to Gallantry Awarded
29 - Medical Treatment provided by Employer
30 - Entertainment Allowance
31 - Professional Tax











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