What is Form 16A?

Form 16A is a vital document that helps taxpayers to compute and pay applicable taxes with greater convenience. To make the most of this particular document taxpayers should be aware of its components, generation and verification process, among others. This will come in handy in more than one way. 

What is Form 16A?

Essentially, Form 16A is a TDS Certificate and is issued by employers on deducting Tax at Source. According to the Income Tax Act, 1961, payments over Rs.30000 that are not entitled to exemptions are liable for TDS. Form 16A serves as proof that TDS was deducted from income sources other than salary and provides essential details about the same. 

For instance, income generated in the form of interest of fixed deposits, insurance commissions, rent receipts, securities, etc. is some of the details that are included.

This certificate is issued every quarter. It must be noted that the due date is usually the 15th of a month and is followed by the due date for quarterly TDS returns. The rate of TDS depends entirely on the nature of non-salary income. Notably, the details contained in this certificate are also available in Form 26AS.  

Which Types of Payments Under Form 16A Attract TDS?

Section 206C of ITA mentions non-salary earnings which attract TDS.  It must be noted that each such income is subject to a different rate.

Typically, the following are included under the purview of TDS

  • Dividends
  • Rent
  • Interest accrued on bank accounts
  • Winnings from a lottery or crossword puzzles 
  • Winnings from a horse race
  • Payouts towards a contractor
  • Insurance commission 
  • Payouts for National Savings Scheme
  • Payouts to non-residing sportsmen or sports association
  • Payments for repurchasing  mutual fund units 
  • Compensation, commission or brokerage
  • Income from the Indian company’s shares 
  • Income from foreign currency bonds
  • Technical and professional service fee
  • Earnings of foreign companies mentioned under Section 196a(2)
  • Revenues generated from units mentioned under Section 196b

It must be noted that TDS is not applicable on the interest accrued on the savings account if the entire sum is less than Rs.10000. Nonetheless if the same exceeds this limit, the account holder must pay TDS on it.

How to Fill TDS Certificate Form 16A?

The following points must be followed when filling out Form 16A-

  1. Fill in the Deductor's name and address, making sure to include their PIN number (Postal Index Number) as well.
  2. Fill in the Deductor's TAN (this is an alphanumeric number with the first four digits in the alphabet and five digits, and 1 in the alphabet).
  3. You will also need to enter the Deductor's PAN (an alphanumeric number with the first four digits in the alphabet, five digits, and one in the alphabet).
  4. Enter the data for four acknowledgement numbers.
  5. The Form of remuneration is next, whether contractual, professional or otherwise.
  6. Enter the corresponding codes for all payments listed.
  7. The name of the deductee whose TDS was deducted.
  8. Mention the PAN number of the deductee whose TDS is deducted in the column PAN no. of the deductee.
  9. In the Form, enter the period, which will be the fiscal year. 
  10. After you've completed all of these fields, you'll need to enter the TDS deduction information.
  11. The TDS amount is stated in words.

Components of Form 16A

The primary components of form 16A are as follows –

Particulars 

Details 

Employer’s details

Name, PAN and TAN

Employee’s details 

Name, PAN and TAN

Nature of payment

Online or offline mode

The receipt number of TDS payment

Helps to trace back details 

Date and deposited tax amount with the I.T. department

Helps to track information

The details contained in this certificate come in handy while filing taxes and Income Tax Returns. It streamlines the process significantly.

How to Download Form 16A?

Once the TDS return for non-salary payments is filed through Form 26Q, individuals should proceed to download Form 16A.

By following these steps, a deductor can download Form no 16A

Step 1 – Visit Income Tax’s official website.

Step 2 – Login to TRACES.

Step 3 – Navigate to the ‘Downloads’ tab.

Step 4 – Select ‘Form 16A’.

Step 5 – Provide the required details.

Step 6 – Click on ‘Go’. Once these steps are complete, individuals can download the said form and complete the formalities accordingly.

How to Verify Form 16A Online?

Taxpayers can verify income tax 16A with the help of the Income Tax Department’s TDS Reconciliation Analysis and Correction Enablement System (TRACES).  Individuals can find out details of the deduction made by their employer by accessing Form 26AS and entering the employer's TAN and their PAN, the certificate number and financial year.

Generally, it is advised that in case they find any discrepancy in details, they should get in touch with their employer first and ask them to make the required changes. 

The following are among the significant reasons for any discrepancy in the form details –

  • Failing to file the TDS return
  • Providing the wrong PAN or TAN details
  • Leaving out details of TDS payment in TDS Return
  • Quoting the wrong amount
  • Quoting incorrect Challan Identification Number

Significance of Form 16A

Form no 16A is issued by the employer or deductor in the current financial year. It is mostly required in a situation where the individual has an additional source of income other than his/her salary.

Financial institutions use this certificate to complete the verification process before extending financial products, including secured and unsecured loans.

These pointers below highlight the importance of Form 16A –

  • The information present in this certificate proves useful while filing taxes.
  • Such information is needed to file ITR as well. 
  • It helps to track the amount of TDS paid on other earnings.
  • It serves as authorised proof of income.
  • The certificate helps to support loan applications and improve eligibility.

Difference Between Form 16, Form A and Form B

The table below highlights the fundamental differences between Form 16, Form A and Form B– 

Parameters 

Form 16

Form 16A

Form 16B 

Issuer 

Employer 

Financial institutions, tenants, and other concerned entities issue Form 16A.

Form 16B is issued by a property buyer to its seller.

Receiver 

Salaried employees 

Non-salaried employees

Property seller 

Purpose 

It is issued when Tax is deducted at source from salary.

It is issued when Tax is deducted at source on income generated from non-salary sources like rent,  returns on investment, interest on F.D., etc.

It is issued when Tax is deducted from income through the sale of property or any immovable assets. 

Components 

Proof of income, employer’s PAN, employer’s TAN, employee’s PAN, tax amount paid on behalf of the employee by the employer, payment acknowledgement, surcharges and education cess.

Deductor’s bank and TAN, deductee’s PAN, amount of Tax paid, TDS payment’s receipt number. 

Seller’s PAN, assessment year, an acknowledgement number of Form 26QB, the breakup of salary paid, deductions under ITA, Relief under section 89. 

ITA Section

Section 203 of the Income Tax Act dealing with Tax Deducted at Source on chargeable earnings. 

Section 203 of the Income Tax Act dealing with Tax Deducted at Source on non-salary earnings. 

Section 194 of the Income Tax Act dealing with sale of property.

Similarities between Form 16A and Form 26AS

The most noteworthy similarity between Form 16A and Form 26AS is the fact that they both contain details about the deducted and deposited tax amount. Both forms provide useful information related to the tax credit.   

Sometimes TDS in Form no 16A proves inadequate to cover all the taxable non-salaried income. As a result, the burden of outstanding tax increases. Consequently, there will be an increase in payable taxes in tax returns in addition to what is declared in Form 16A. 

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