TDS Certificates - Form 16 & 16A

The employers issue their employees two certificates of tax deduction at source (TDS) which are particularly Form 16 and form 16A. Let us find out about the two forms in detail:

IT Act section mandating TDS

When it comes to governing the income, tax paid by salaried individuals, organisations, companies, trusts and associations, the Income Tax (IT) Act, 1961 as well as the IT Rules 1962 mandates their income tax payment. Section 203 directs the employers to deduct tax at source and issue the two forms, Form 16 and 16A giving a valid proof.

Importance of Form 16A

The Form 16 A is necessary as a proof of TDS as well as for tax compliance. The employee has to show the document while IT scrutiny as evidence. The banks and lenders also require this proof with the employee’s salary slip. Thus, the companies should make sure that they fill all the columns appropriately and get it signed duly by the in-charge office holder.

Form 16A

Similar to the Form 16, this form works as a certificate of TDS for an employer. This document shows the amount of tax deducted at source, the tax deposited with the IT department on income except the salary, nature of payment, etc. The TDS as per IT Act can be deducted only on the payments of ₹30,000 if not exempted.

The TDS should be deducted from the salary based on the Income tax slab rates. It is applicable on all the incomes including house rent and interests. The Form 16A declares the TDS deductions made on all incomes other than salary.