Become a Govt. Certified GST Practitioner in just 58 hours. Register Now!

INCOME TAX

CA Vishal (CA working in industry) (620 Points)

20 November 2009

Hi,

Please let me know if we have to complusorily issue FORM 16 to employees even if there annual salaries is below the maximum limit ie is exempt for tax . eg is 150,000p.a can we issue salary certificate in lieu of Form 16. what does the IT provisions say in this regard

Reply
Follow
Share

9 Replies

Juzer Sadikot (CA - innovative solutions for Imports and Exports) (1309 Points)
Replied 20 November 2009

Dear Hello

In the case of an individual, resident in India, where his income from salaries before allowing deductions under section 16 of the Income-tax Act, 1961 is or under one lakh fifty thousand, the certificate of deduction of tax at source shall be in Form No. 16AA.

Regards

Juzer

Upgrade to CAclubindia Pro. Subscribe Now!

CA Devanshi Gandhi (Ajani) (FCA DISA Mcom CIFRS & LLB) (9060 Points)
Replied 20 November 2009

following conditions must also be satisfied along with the above mentioned :

employee should not have any income from Profession or Business, Agricultural income and Capital gains and he is not in receipt of any other income from which tax has been deducted at source by any person other than the employer.

Sunil (Trader) (2611 Points)
Replied 20 November 2009

Devanshiji,

How is the employer to know about other businesses or incomes of the employee if employee does not report? If employee pays advance tax and discharges his tax liability, why should he declare to his employer about his other properties and income. Could you refer me to any section where there is a compulsion on employer tofind out other income sources of employees.

The income tax department is not obliged to divulge any information to employer of returns of employee and it will not be provided even under the RTI Act. The employer will not be given details from Income Tax Department as department is only concerned about legality of the source of income and that you have returned your income accurately and not about whether your employment contract prohibits you from these day trading etc.

Please let me know if any procedure has to be followed. I know a few employees in my organisation are doing day trading but none of them have reported how much profit there is in that activity. Even for employees reporting their other income the wording in the act is 'may' and not 'must' report. I request urgent response from you so that I can take necessary action to get these employees to report their profits to the accountant issuing Form 16 to them if indeed there is an onus on the employer to find out.

CA Devanshi Gandhi (Ajani) (FCA DISA Mcom CIFRS & LLB) (9060 Points)
Replied 20 November 2009

FORM NO. 16AA

[See third proviso to rule 12(1)(b) and rule 31(1)(a)]

Certificate for tax deducted at source from income chargeable under the head

"Salaries"-cum-Return of income

For an individual, resident in India, where

(a) his total income includes income chargeable to income-tax under the head 'Salaries';

(b) the income from salaries before allowing deductions under section 16 of the Income-tax Act, 1961

does not exceed rupees one lakh fifty thousand;

of business or profession' or 'Capital gains' or agricultural income; and

(d) he is not in receipt of any other income from which tax has been deducted at source by any person other than the employer.

1 Like

CA Devanshi Gandhi (Ajani) (FCA DISA Mcom CIFRS & LLB) (9060 Points)
Replied 20 November 2009

https://law.incometaxindia.gov.in/DITTaxmann/IncomeTaxRules/pdf/itr62Form16AA.pdf

Upgrade to CAclubindia Pro. Subscribe Now!

P.G.VENKITACHALAM (BANK EMPLOYEE) (42 Points)
Replied 20 November 2009

please let me know whether any programme is available for caliculation of income tax on monthly salary for AY 2010-2011. GET ME THE INFORMATION AS QUICK AS YOU CAN.

WITH REGDS

P.G.VENKITACHALAM

CA NARAYANASAMY (B.COM,FCA) (91 Points)
Replied 20 November 2009

to P.G.VENKITACHALAM

FIND THE ATTACHED FILE - FOR AY 10-11TAX CALCULATOR

Attached File : 2 income tax calculator fy 2009 10.xls downloaded: 298 times

1 Like

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 21 November 2009

Thanx Narayanasamy.. A good file

Sunil (Trader) (2611 Points)
Replied 21 November 2009

Thanks Devanshiji,

This form is not applicable for us as we are not filing returns for any employee of ours. We are just giving salary certificate on leeterhead to whichever employee below 1.5 lakhs asks us even if they do not file return as they want 2 wheeler loan etc. For a moment I got into a wrong assumption that I have a duty to the department to determine all incomes of the employee which is an impossible task as no person will honestly give such data.