The salaried class individuals are required to file Income Tax Return by July 31 for their income realized in the previous financial year. Accordingly, employers who deduct TDS (tax deducted at source) on salary income are required to provide Form 16 to the employees. This has to be done by May 31st of the FY immediately following the previous FY in which the tax was deducted and income tax paid.
In cases, where no TDS has been deducted, employers need not issue Form 16.
The form list the details of TDS deducted every month by the employer which is then submitted to the government.
As per Section 203 of the Income Tax Act, the employer is mandatorily required to issue Form 16 to employees, which details the total TDS deducted on salary income in the previous year.
Form 16 that comprises two parts, Part A and Part B is a summary of the amount paid as salary to the employee and the tax deducted at source (TDS) on it. Know more on Form 16, here.
In cases, where the employer (either current or past employer) fails to issue Form 16 to the employees, a penalty has to be paid u/s272A (2) (g) of the Income Tax Act.
Amount of Penalty Payable:
If the employer fails to furnish Form 16 to employees by the deadline of May 31, he is required to pay a penalty of Rs. 100 for each day until he provides the form to the employee. It is to be noted that penalty will not be more than the total tax deductible amount.
Recourse available to employees in case the employer defaults on issuing Form 16
The only recourse available to employees in case the employer refuses or defaults on providing Form 16 is he or she can intimate the concerned assessing officer who would then initiate the necessary action or begin penalty proceedings against it.