Many times we as taxpayers get confused between Form 16 and Form 16A. An employer issues Form 16 to its employees while other deductors issue Form 16A. However, both differ in their purpose, information regarding TDS and salary or other income. In this article, we have covered all about Form 16 and Form 16A along with the difference between Form 16 and 16A.
What is Form 16 of Income Tax Act?
In the case of salaried employees, every employer must issue a Form 16 to the employee. In simple terms, Form 16 is a document that summarises the salary details and tax deductions of a particular employee. It reflects the total tax that has been deducted by the employer along with the salary breakup.
As per the provisions of the income tax act, the employer is mandatorily required to issue Form 16 to the employee. This needs to be done on or before 15th June of the next financial year. Let’s say for a particular employee, the tax deduction took place in the financial year 2020-21. In this case, the employer is required to issue Form 16 on or before 15th June 2021.
In the case of an individual, they are liable to pay taxes provided their total income is above Rs. 2.5 lakhs. In the case of salaried employees whose total income is above Rs. 2.5 lakhs, the employer is mandatorily required to deduct tax at source. The employer will deduct taxes after considering the details of other income, tax declarations, exemptions, etc. of the particular employee.
Once the tax is deducted from the employee’s salary, it is deposited by the employer on a monthly basis. At the end of the financial year, Form 16 is issued to the employer that reflects the break up of the salary, tax exemptions, etc.
What are the Components of Form 16?
Form 16 consists of two parts, Part-A and Part-B. Part-A consists of the basic information about the employer and the employee like PAN, TAN, address, financial year, assessment year, tax deducted at source (tds), etc.
Part-B consists of information relating to the other income earned during the FY, tax exemption, salary, net tax payable, etc.
The following are a few components of Form 16:
- Details of the employer i.e. name, address, TAN, PAN, etc
- Details of the employee i.e. name, address, PAN, etc
- Gross salary and perquisites, allowances, etc
- Total tax payable by the employee
- Total TDS deducted and collected along with the TDS challan number
- Other income earned by the employee, income from the previous employer
What is Form 16A of Income Tax Act?
For the purpose of the income tax act, any person can earn income through two categories of sources, one being “salary” and the other being “other than salary”. Form 16A is a TDS certificate that is issued in case tax is deducted on income other than salaries.
Let us understand the above with the help of an example. Suppose Amit has a fixed deposit of Rs. 1 lakh with Union Bank of India. The investment made by Amit will earn some interest during the year. In this case, the bank will deduct tax at 10% and issue Form 16A to Amit on a quarterly basis. Similarly, Form 16A is issued when TDS is deducted on rent, insurance commission, etc.
Form 16A contains details such as the name and address of the deductor and deductee, PAN, TAN, challan details of the tax deposited along with the total income earned and tax deducted on the same. All the details that are present in Form 16A can also be viewed from Form 26AS.
In order to file the income tax return smoothly, both Form 16 and Form 16A is required. While the details of the former cannot be completely found in Form 26AS, the details of the latter and available.
What are the Components of Form 16A?
Form 16A consists of the following details:
- Name of tax deductor, PAN, TAN
- Name of tax deductee, PAN, TAN
- TDS payment details
- TDS challan number
- Date of deposit along with the tax amount
The above information can be directly checked from the Form 26AS of the deductee.
Difference Between Form 16 and 16A
Both the forms are TDS certificates and reflect the income on which TDS is deducted. Both the forms contain a few common details such as TAN, PAN, address, financial year, assessment year, income, TDS section, etc. However, they both differ in terms of who is eligible for which form, who will issue, and when.
The following table will help you under the difference between Form 16 and 16A.
|Particulars||Form 16||Form 16A|
|Description||Form 16 is a TDS certificate issued by the employer to the employee stating the tax deducted at source along with the salary income.||Form 16A is a TDS certificate that reflects the tax deducted at the source on the non-salary income.|
|Eligibility||There should be an employer-employee relationship and the employer must be paying salary to the employee.||It is applicable in the case of self-employed professionals.|
|Time limit for issue||Form 16 is issued annually after the end of the financial year. It is to be noted that the same needs to be issued on or before 15th June after the closure of the financial year.||Form 16A is issued on a quarterly basis.|
|Issued by||Form 16 is issued by the employer to the employee.||Form 16A is issued by banks, financial institutions, etc|
|Issued to||Form 16 is issued to an employee||Form 16A is issued to persons having income other than salary.|
|Components||Employer’s PAN detailsEmployer’s TAN detailsTax paidEmployee’s PAN detailsName and address of the employer and the employeePayment details||TAN of the deductorPAN of the deducteeTax paidPayment details|
|Relevant provisions||It is covered by section 203 of the income tax act which deals with the issue of Form 16 on the chargeable salary.||It is also covered by section 203 of the income tax act that is concerned with the TDS on non-salary earnings.|
Frequently Asked Questions
The data from both Form 16 and Form 16A can be used to file the income tax return. It is important to ensure that the details of neither are missed out while filing the return.
Form 16A is issued on a quarterly basis. The due date of issuing form 16A is the 15th of the month following the due date of the quarterly TDS return.
Form 16 is issued by the employer on an annual basis. For example, if Mr. A was employed with XYZ Private Limited for the FY 2020-21, the Form 16 pertaining to this year will be issued by XYZ Private Limited on or before 15th June 2021.