Are you digitally signing Form 16’s the Right Way? These 10 tips will help you

With only a few more weeks to go for May 2025, the busy times are back with employers preparing to provide their employees with Form-16s for the Financial Year 2024-2025. We all know that Form-16 is the TDS deduction certificate required to be issued to all TDS-positive employees on or before 30th May of every year. Last year the government introduced Part-A to be downloaded from “TRACES” and Part-B to be generated from the respective payroll software. We assist in the digital signing & distribution of about 11 lakh+ Form-16s & are happy to share our expertise with you all…

• Decide whether you are going to provide Form-16s to all employees [TDS positive cases & Nil TDS employees] or to only TDS positive employees. This will impact your Q-ETDS compliance requirements.
• Verify your Part-A data with Part-B data. The “Total Tax Liability” data on Part-B should be equal to or less than the “TDS Deducted & Paid” data on Part-A being generated from TRACES for each employee.
• Check who’s name, designation, & signature will be appearing on the Form-16. Ideally, you want the Form-16 Part-A & Part-B to contain the same name & designation.
• Check the date on Part A and the date on Part B. You don’t want two different dates!
• Ensure the digital signature is of CLASS-2 [as required by the income tax department for use on form-16s] and has a validity of at least 3 more months.
• Decide if you would send Part-A & Part-B as separate attachments or merge & provide as a single attachment. The latter is convenient from the employee’s point of view.
• *Important*: Check if your payroll software supports USB Digital Signature. PFX files are no longer to be used, as per government regulations.
• Planning to password protect your Form-16s for enhanced security? Decide the password parameter that you would use. Ensure the password is 128-bit SHA-compliant.
• The date on Part-A, Part-B & the Digital signature should be on or before 30th May 2025
• If you are emailing the Form-16s to your employees, automate the emailing process. It’s not a very good idea to do it manually or using macros; these may affect the accuracy of the exercise.
• If you are uploading the Form-16s on your ESS Portal, ensure the file name is as required by your ESS software: employee employee ID.
• Last but not least, sample test before you issue Form-16. The last thing anyone wants is an exercise to be less than 100% accurate!

Ok… so here’s something interesting. If you are looking for a tool to merge Form-16 Part-A & B, password protect, digitally sign, or bulk email it to your employees in a single shot… Download this tool. Click Here.

It’s free, though! See if it helps you.

Do post your questions/comments below. Happy to help.