Form 16 Background Verification is an important step for any business in the hiring process for a new employee. It can help companies verify that the information the candidate has provided regarding his or her previous compensation is true since it clearly contains every salary transaction, including tax deductions. Therefore, with Form 16 verification, you can fairly determine their new salaries and incentives for when they do start working for your company.
About Form 16
Form 16 is a certificate that employers issue to their employees to certify that they deduct TDS, which stands for Tax Deducted at Source. At the end of every financial year, the employer has to issue Form 16 which contains the total amount of salary, as well as the amount of tax deducted from an employee’s earnings. Form 16 is also sometimes called a salary certificate.
What is Form 16?
Form 16 contains two parts, namely Part A, followed by Part B. Part A contains the PAN of the employee and the employer’s TAN. It also includes the names and addresses of both parties, as well as how long the employee worked under the employer and the year of assessment. The assessment year for any financial year is the following financial year. For example, the assessment year for 2017-2018 will be 2018-2019. Apart from these details, Part A contains the summary, and monthly details of TDS deducted and deposited by the employer to the government. On the other hand, Part B contains a combined detail of the employee’s salary for the financial year. Salary break up, as well as tax deduction details he or she claims as per Section 80 of the Indian Income Tax Act are mentioned in Part B of Form 16.
Why is Form 16 Verification Important?
If any company deducts tax for employees at the source, they are legally required by the Income Tax Act to issue a Form 16. It is one of the most significant tax documents for an employee since it acts as a basis for their income tax return. As such, Form 16 verification can help you make sure that any candidate does not lie about the details of their past compensation. If the report of the Form 16 verification shows that the candidate’s claims are credible, then you can go ahead to decide a suitable salary for them. When combined with a Credit Check, Form 16 verification can be even more reliable. Not only will you be sure that the candidate has given authentic information regarding his or her former salary, you will also be sure, through a credit check, that they are fiscally responsible individuals.
How is Form 16 verification conducted?
IRDA mandates the due diligence of a prospective agent/ PoS to ensure a fraud-free work environment for the companies. Mis-selling and premium pocketing can create negative sentiments towards the industry, among its customers who might not understand the product features and importance.
Real-time verifications become more than the need of the hour in such cases, for not only combating agent frauds but also ensuring customer trust and streamlined revenue. The faster the onboarding process, the faster agents can be on the field, pushing new business and gaining new business for your company.
If you, as an employer want to conduct a Form 16 verification, you need to verify the amount of TDS deducted for the candidate’s PAN, or Permanent Account Number against their former employee’s TAN or Tax Deduction and Collection Account Number.
Here are the details of an individual that can be provided using Form 16 verification:
• Name of the individual
Using Form 16 verification, you can verify the name of the candidate as it will appear in their associated PAN.
• Former employers
You can also see all former employers of a candidate using Form 16 verification.
• Amount of TDS deducted
A Form 16 verification lets you know just how much amount was deducted as TDS for a candidate. At AuthBridge, we can run a thorough Form 16 verification process for you, using our advanced and innovative application program interface.
