What is Form 16A? Form 16A for Income Tax Return Filing

Form 16A
Purpose Form 16A is issued when tax is deductible at source from non-salary sources such as interest in investment/FD, rent, etc
Issuer Employer or deductor
Receiver Non-salaried employees or those with earnings from non-salary sources

Form 16A is basically a certificate for Tax Deducted at Source (TDS). It is issued by employers. The eligible payments for such TDS are over Rs. 30,000 and not tax exempted. Form 16A is a TDS proof for such payments from other sources than salary. The Form also contains details of these payments. This certificate is released every quarter usually from the 15th of a month till the due date of TDS return (quarterly). The TDS rate depends on the non-salary income type.

In this post, we will discuss Form 16A importance, components of this tax form, how to download, payments accounted for TDS, how to fill the form, and FAQs.

What is the Importance of Form 16A?

Here is why Form 16A is significant today:

  • This form is essential when a person has an extra income source other than the regular salary. The employer or deductor issues Form 16A to such individuals in the current financial year
  • This certificate is also useful for financial institutions to complete the verification process prior to providing financial services and products such as loans
  • Other than these pointers, the form also presents information useful for tax filing and ITR
  • the certificate assists in supporting loan applications to boost the applicant’s eligibility for the same
  • It serves as a proof for authorized income. It also tracks the TDS amount paid on other earnings

Components of Form 16A

The Form 16 A details are also available in the Form 26AS. The details in the certificate help during IT returns and filing taxes. Here are the components of the form:

  • The nature of payments such as offline or online payment
  • Employer’s details such as PAN, name, and TAN
  • Employee’s details such as name, TAN, and PAN
  • Date and deposited tax amount with the Income Tax Department to track information
  • TDS payment’s receipt number to trace back details

What Are the Steps to Download Form 16A?

You must download this form after filing the TDS return for non-salary payments through Form 26Q. Here are the steps for the download:

  • Go to the official website of the IT Department, India
  • Login to TRACES
  • Go to the ‘Downloads’ tab
  • Now select Form 16A and enter the asked details
  • Click ‘Go’
  • After completing the steps, download the form and adhere to the formalities

Which Payments Are Liable for TDS?

Under the Section 206C of the Income Tax Act, certain non-salary incomes are liable for tax. Each of these incomes are applicable to different rates. TDS does not apply on accrued interest on savings accounts, if the earned sum is lower than Rs. 10,000. If the sum exceeds this limit, then you have to pay the tax deducted at source on it.

Some of the relevant payments liable for tax deduction include:

  • Payments for repurchase of mutual fund units
  • Insurance commission
  • Dividends
  • Interest earned on Fixed Deposits
  • Interest earned on bank accounts
  • Professional or technical service fee
  • Securities
  • Payouts for contractors
  • Winnings from horse race, crossword puzzles, and lottery
  • Rent receipts
  • Payouts to non-resident sportspersons or sports associations
  • Brokerage, commission, or compensation
  • Revenues from units as given in the Section 196b
  • Foreign company earnings as per Section 196a(2)
  • Payouts for National Savings Scheme
  • Income from foreign currency bonds and Indian company’s shares

How to Fill in the Form 16A?

Here are the relevant directions:

  • Provide the name and address of the deductor. Do remember to also enter the PIN number
  • Now provide the deductor’s TAN. This is an alphanumeric number. Here, the first 4 digits are in alphabetic order, followed by 5 in digits, and the last 1 in alphabet
  • Proceed to enter the deductor’s PAN, which is an alphanumeric number wherein first 4 digits are alphabets and 5 in digits with 1 as alphabet
  • Submit the information of four acknowledgement numbers, payment type (contractual, professional, or any other)
  • Enter the corresponding codes to the payments as per their type
  • Enter the deductee’s name. This person is the one whose TDS is being deducted
  • In the respective column, enter the PAN number of the deducted
  • Now provide the period, which is in the current financial year. For instance, 1 April 2021 to 31 March, 2022
  • Enter the TDS deduction amount and details in numbers and words

Frequently Asked Questions about Form 16A

Here are the Form 16A FAQs:

Here are the respective differences:
Parameters Form 16 Form 16A Form 16B
Who Issues It? Employer Issued by tenants, financial institutions, and other relevant entities Issued by property buyer to the seller
Who Receives It? Salaried employees Non-salaried employees Property seller
What is the Purpose? Issued when tax is deductible from salary Issued when tax is deductible at source from non-salary sources such as interest in investment/FD, rent, and others Issued when tax is deductible on income from property sale or sale of any other immovable asset
What Are the Components? Employer’s PAN, employee’s PAN, income proof, tax amount paid by the employer on behalf of the employee, education surcharges, and payment acknowledgement Deductor’s TAN and bank details, PAN, TDS payment receipt number, amount of tax paid Seller’s PAN, acknowledgement number of Form 26QB, assessment year, breakup of income, relief under Section 89, deductions under ITA
ITA Section Section 203 of the Income Tax Act. This is in regards with TDS on taxable income Section 203 of the ITA in regards to taxable non-salary income Section 194 of the ITA in regards to property selling
Usually, the deductor issues the Form 16A. The document reflects the total income and the total earnings, tax deducted for the FY from different sources other than the salary. It is issued in the current financial year. You can download it from the Income Tax Department’s official website. It is available in a PDF format and is fillable.
As a taxpayer, you can do online verification of income tax 16A through TRACES (TDS Reconciliation Analysis and Correction Enablement System). You can access Form 26AS to know the deductions done by the employer. Enter the TAN and PAN of the employer, along with the certificate number and financial year. If there is any error in details, contact your employer initially for rectifications. Usually, discrepancies in the form details may result from:
  • Entering wrong Challan Identification Number or amount
  • Not filing the TDS return
  • Not submitting details of TDS payments as in the TDS return
  • Entering wrong PAN or TAN

In this form, there is a mention of the deductor's name, TAN, and PAN. This can be from the insurance company from which the TDS applies. Or, it can be from the bank where the TDS is deducted. Otherwise, it can be any other place/person you receive the earnings from, on which tax applies.

Also, the form includes the deductee's PAN and name along with the details of those who receive the TDS benefits. Then there is inclusion of payment information such as nature of payment, the amount, and payment date. Lastly, there is the receipt number of the TDS payment.

Both these forms have the same details about the deposited and deducted tax amount. Also, they contain useful information about tax credit. However, information of TDS in Form 16A may not always cover all the taxable income (non-salary ones). In this case, the outstanding tax amount may be more. So, the amount of tax payable in returns will be more as compared to that declared in Form 16A. Thus, it is important to fill up the form correctly and submit the same on time.