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 commission, rent receipts, securities, etc. are 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 return. 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 of such income is subject to a different rate.

Typically, these 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 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.

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.

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How to Download Form 16A?

Once 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. 

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

  • Failing to file the TDS return
  • Providing 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

This table below highlights the fundamental differences between them – 

Parameters  Form 16 Form 16A Form 16B 
Issuer  Employer  Financial institutions, tenants, and others 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 on 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, 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. Since this form is so vital for filing taxes and forwarding ITR, individuals must ensure that it is filled up correctly and submitted on time.