Form 16 and Form 16A, are very important documents for filing an income tax return. While Form 16 is associated with salaried individuals, Form 16A is useful for TDS (Tax Deducted at Source) for non-salaried income. Both Forms - 16 and 16A help the individuals to file the income tax return. These forms determine the amount of tax payable to tax authorities. The purpose of both the forms is the same i.e., facilitating the individuals to file income tax returns.
In this post, we will discuss everything you need to know about Form 16 and Form 16A that help with income tax calculation and filing.
Form 16 is a certificate issued by the employer stating that the TDS on the salaried income of the holder has been collected by the employer and further deposited with the Income Tax Department. The due date for issuing this certificate is 15th June every year. This form is issued by the employer for only those employees whose tax has been collected by the employer. This form also contains the details of the salary of the respective employee.
The form has the following 2 parts:
An employer is supposed to deduct TDS from the salary of the employees and deposit the same with the government if the annual income of the individual employee is above the basic exemption limit i.e., more than Rs. 2.5 lakhs for the respective year. This limit is inclusive of the disclosure of the employee regarding any other income about the specific year.
Any limit below Rs. 2.5 lakh shall not fetch any TDS. No Form 16 is issued by the employer if the salary of the individual (including any other income disclosed by the employee) is less than Rs. 2.5 lakh. In case, one has more than 1 employer for a particular year, Form 16 is to be obtained from all the employers separately. It is also known as a salary certificate.
Form 16A is a certificate that describes the income of the individual and TDS collected thereon, in which the income is any income other than salary. For example, the bank issues its customer a Form 16A for the interest income in their respective fixed deposit accounts, TDS on rent earned and insurance companies also issue Form 16A to its insurance agents for the commission earned.
It consists of the basic details such as PAN and TAN details, details of TDS, deposit of tax with the concerned department, amount of TDS, deductions, etc. All details available in this form are also there in Form 26AS. This form is issued by the TDS collector every quarter and the due date for issuance is the 15th of the month followed by the last month of every quarter.
| Form 16 | Parameter of Evaluation | Form 16 A |
|---|---|---|
| Salaried individuals | Eligibility | Self-employed or professionals |
| Salary | Issued for | Other income |
| Dividends, interest on securities, salary | Incomes eligible | Other than salary income such as rent, commission, etc. |
| Only TDS details are available | Relationship with form 26AS | All details in this form are there in form 26AS |
| PAN details of employer as well as employee, TAN details, education cess, TDS details, acknowledgment of payment. | Components | PAN of individual, TAN of TDS collector, receipt number of TDS payment, tax paid. |
| Issued on an annual basis | Frequency | Issued every quarter |
| Employer | Issued by | Concerned departments such as a bank in case of interest income, the insurance company in case of commission income, etc. |
| It is a certificate that is given against the salaried income and TDS collected thereon. | Description | It is a certificate that is issued for incomes other than salary and TDS collected thereon. |
| Both the forms can be verified online in the portal. | The Similarity Between Form 16 and 16A | Both are governed under Section 203 of the Income Tax Act. |
Here are the FAQs:
The employer collects TDS on the salary only and does not include other incomes as in many cases the employees do not provide any disclosure to other incomes. Hence, the employer deducts TDS at the rate applicable to the slab as per the salary income only whereas the actual slab of consideration is higher than that and hence the liability of tax is higher.
Also, in the case of 16A, the TDS shall be deducted at a rate that applies to only the other income and shall not include salary income. This mismatch between the two forms may create a difference in the actual tax payable and tax paid. For this reason, you may have to pay income tax even if you have paid the same individual with concerned authorities earlier.
Yes, as stipulated by the income tax department you have to file an income tax return even if your TDS is already deducted with the concerned authorities earlier. The department has made it necessary for all individuals up to the age of 60 to file an income tax return if the total income exceeds Rs. 2.5 lakh for a particular year.
If the TDS already deducted for you is higher than the net tax payable (as a consequence of mismatch or you might have some deductions such as 80C which are not counted for in form 16 and/ or form 16A), you should file ITR to get the extra TDS back in your account.
Also, if the TDS reflected in Form 16 and/ or Form 16A is less than what is to be paid by you, ITR should be filed by you and a different amount of tax should be paid to avoid any type of penalty to be imposed by the income tax department in future.
This tax form is for salaried individuals.
This tax form is for self-employed individuals or professionals.
Form 16 is issued every year while Form 16A is issued every quarter.
