In this article I will be writing about Form 16 and Form 16A which is needed while filing the IT returns. Many people not aware of the from 16 and the intention of this post is to provide details about the form 16 and why it is needed. Form 16 and 16A is similar in nature with small difference. If you come across any doubts or queries regarding the Form 16 and 16A please post it in the comments section.
In simple words, form 16 is the proof for your income and tax paid to the govt. before filing the IT returns. Most of the banks prefer to have the form 16 for verification for find your income. So, it is very important for you to get the form 16 from your employer. If you have any doubts, please post it in the comments section. Please subscribe to our future articles here.
What is Form 16?
If you are salaried employee in an organization, then you will get the salary after deducting tax by the employer. This process is called as Tax Deduction at Source (TDS). Every company has to get the TIN. TIN is Tax Identification Number. This number is issued to a person who is responsible to deduct Tax on payments made to employees.
At the end of financial year, company must issue a form 16 which contains the details about the salary earned by that employee and how much tax deducted. It will have details on each month. In simple terms Form 16 is details about the tax deducted by the employer in behalf of employee. The same will be paid to government by the company. Many people think that getting the Form 16 alone is enough for the tax filing. Receiving the form 16 is different from filing the tax returns. Tax payer has to use the Form 16 to file the IT return every financial year end.
For example, if you have worked in two different companies in the same financial year, you must obtain the two Form 16 to file the IT returns.
Form 16 is Certificate of deduction of tax at source under section 203 of the Income Tax Act, 1961. Employers provide TDS certificate to the employees on Form 16.
It is not compulsory to give the form 16 to the employees if there is no TDS deducted.
What is Form 16A?
The purpose of the Form 16 and 16A is the same except the issuing person. Form 16 is applicable only to the salaried employee. There is many other areas where TDS can be applicable like deducing the tax for interest earned by your Fixed Deposit in the Bank. Here bank is the person who deducts the tax. For every financial year they must issue a TDS certificate to the customer. They have to fill the Form 16A and hand over to the customer.
- Example for Form 16A:
- Form 16A is provided by any other institutions deducted the tax in the form of TDS has to issue Form 16A. For example, you are working as an agent for a bank, they provide you the commissions for the sales. In that case they will deduct the tax and give you the money. At the end of year, they will give you Form 16A with the details of tax deducted on your commissions. This form will be used same like Form 16 to submit your IT returns.
- Form 16A is issued in the following cases:
- For interest on securities; dividends;
- interest other than interest on securities;
- winnings from lottery or crossword puzzle;
- winnings from horse race;
- payments to contractors and sub- contractors;
- insurance commission;payments to non-resident sportsmen/sports associations;
- payments in respect of deposits under National Savings Scheme;
- payments on account of repurchase of units by Mutual Fund or Unit Trust of
- commission, remuneration or prize on sale of lottery tickets;
- fees for professional or technical services;
- income of foreign companies referred to in section 196A(2);
- income from units referred to in section 196B;
- income from foreign currency bonds or shares of an Indian company referred to in section 196C;
- income of Foreign Institutional Investors from securities referred to in section 196D
Download Sample Form 16
I hope this article is useful to understand the basics of Form 16 and Form 16A. These two forms are most widely used in our life time. After receiving the form 16, file your income tax returns online. If you have any doubts please post it in the comments section. I will answer all you queries. Thank you for reading this article. Please subscribe to our future articles here.
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