Form 16 and Form 16A are used by individuals as important documentations while filing Income Tax Returns. These documents usually are the proof of the tax deducted at source. Form 16A fall under Form 16 and is a documentation of indirect taxes levied in cases when a salaried individual wins a lottery, interests earned on recurring deposits or some similar events.
One of the most common questions that arise in this case is the concept of Form 16 and Form 16 A and their difference.
What is Form 16 and Form 16A?
Form 16 is a certificate documented under the Section 203 of the Income Tax Act. It is a documentation applicable under tax deduction at the source that is the salary. In short, it is a certificate issued by the employer for the employee known as the “Salary Income Certificate”. It is mandatory that all salaried citizens file their Income Tax Returns by the 31st of July for every financial year. While filing for Income Tax Returns, Form 16 has to be referred as it contains the following information:
- BSR code of the bank branch where the salaried employee deposits the tax deducted at source.
- The amount of tax debited.
- The referral number or challan number associated with tax deduction.
- Date of tax deposit.
- Proof of income for a salaried employee
- PAN and TAN details of employer and PAN details of employee
- Total Income Tax paid.
- Surcharge and cess as applicable
- Tax paid by employer on the employee’s behalf
The above information is used in Income tax Returns filing to claim the benefits for tax deducted at source. Since the monthly deduction is reflected in Form 16, it is easy to track.
This Form 16 in divided into two parts:
- Form 16A
- Form 16B
Form 16A is basically the tax deducted at source for indirect incomes or income other than the salary. It can be anything starting from Mutual Funds returns to winning a lottery. Form 16A has the following details or information documented under it:
- Personal information of employer and employee
- PAN and TAN details
- Total Period of employment under an employer
- The tax deducted at source as per the set norms of the government.
Form 16A is necessary in order to apply for tax exemptions under Section 80C of Income tax act as the “indirect incomes” includes all kinds of investments ( ELSS, interests on Fixed Deposits, etc).
In case there is an absence of the TDS (tax deducted at source) for an employee only the salary certificate or Form 16B is issued by the employer.
Difference Between Form 16 and Form 16A
Difference In Terms Of Definition:
Form 16 and Form 16A has a basic difference. Form 16 is the total salary TDS certificate documentation and Form 16A is the TDS certificate documentation for sources of income other than the salary.
Difference In Terms Of Eligibility:
Form 16 stands for every salaried individual. Form 16A is generally for a self-employed individual or a salaried employee who gets regular returns from investments. 16A also stands for a professional individual with the relevant degree of qualifications.
The details of information under Form 16 and Form 16A has been stated previously in this article.
What is PAN?
PAN stands for Permanent Account Number. It is an ID proof for an Indian citizen and is referred to for payment of Income Tax.
What is TAN?
TAN stands for Tax Deduction or Collection Account Number. It is for the Indian citizens who debit or collect tax payments made by employed individuals.