Certificates of TDS: Form 16 and 16A Last Updated : 13 Jul 2020

Form 16 and 16A are certificates issued by the employer to show proof of tax deducted at source. Form 16 is also essential to prove tax compliance. It is also considered as income proof.

Section of IT Act that mandates TDS

The Income Tax(IT) Act, 1961 and IT Rules (1962) govern the payment of Income Tax by all income earning individuals, companies, organizations, associations and trusts as the case may be. Section 203 mandates that the employer shall deduct tax at source and issue certificates in the Forms 16 and 16A to the deductees as a proof of the same.

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Form 16A

Like Form 16 is for salaries, Form 16A is a certificate of tax deduction at source (TDS) by an employer which shows the amount of tax deducted at source, nature of payment, and the tax deposited with IT department on income other than salaries. The IT Act stipulates that TDS to be deducted at source on all payments than Rs. 30,000 unless otherwise exempted.

Also TDS is deducted on salaries as per existing Income Tax rate slabs . TDS on all other income such as interest and house rent as applicable. Form 16A shows TDS deductions made and deposited on all other income except salary.

The basic difference between Form 16 and Form 16A is that the former reflects deductions made from salary and the later shows deductions on income other than salary. Form 16 is usually issued annually while the latter is issued quarterly.

What Form 16A consists of…

The Form 16 A certificate is issued by the employers and carries the following:

  • Name, TAN and PAN of the employer who deducts tax
  • Name, TAN and PAN of the employer who deducts tax
  • Amount paid, nature and date of payment
  • Receipt No of TDS payment

How Form 16A can be Verified Online

The Income Tax maintains a TDS Reconciliation and Analysis and Correction Enablement System (TRACES) which allows online verification of Form 16A by visiting the following link: http://contents.tdscpc.gov.in/

The employee who wishes to know the details of deduction by his employer can access Form 26 AS at this website by entering the TAN no of employer, his own PAN no, the financial year, certificate no and total amount deducted. In case of any discrepancies, he is advised to contact his employer first.

What is Form 16?

Form 16 is the document or certificate or that Employers in India issue to their salaried employees as proof of TDS. The salaried personnel can then submit the forms while efiling Income Tax in India.

Features of Form 16:

Employees working for any employer have to pay tax on their incomes as per IT Act. Form 16 therefore is an important document that helps in the process of filing tax returns:

  • Employee can submit this as proof of income in case of IT scrutiny
  • If the employee’s income is below Taxable limit, employer may not issue Form
  • Definitive Tax Deduction at Source (TDS) Certificate issued to salaried employees
  • It is also proof of the salary employees receive
  • Contains details of tax paid by Employer on behalf of the Employee
  • If Employer deducts TDS, the responsibility to issue it to the employees lies with him
  • Corrections can be made on a Form 16
  • Only those employers with TAN (Tax Deduction Account Number) can deduct TDS, and issue a Form 16

What does Form 16 consist of?

The Form 16 usually carries details like names and permanent account numbers of the deductor and the deductees, TAN of the employer, acknowledgement about how much tax is paid, detailed breakoff salary like gross and net incomes, Education Cess and surcharges, balance tax refundable to employees or payable by them, tax payment particulars like challan number or cheque/DD number etc.

Why is Form 16 important?

Form 16 is not only a proof of TDS but a document of importance for Tax compliance. It is the only document that an employee has to show that he or she has paid tax and can be shown as proof during IT scrutiny. Banks and other lenders also accept it as a valid income proof and treat it as a proof of income at par with salary slip. Companies at their end should also ensure that all details in columns are duly and accurately filled in and the Form 16 is signed by a responsible officeholder of the company.

So now you know how important these two forms are, just remember to collect them from your employer in time and use them to File your Tax by the due date as a responsible taxpayer.

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