Form 16 and 16A
Form 16 and 16A
This is a common word that we hear often from many people around us specially from salaried people. It is also required when you apply for loan or a credit card from a bank. But what is it? What is its significance? What information does it hold that is so dear? What if you don’t have it? Lets find out about Form 16
Form 16 is a TDS certificate...
It is issued by an employer to his employees...
In fact, section 192 of the Income tax Act mandates the employer to deduct taxes at the time he pays salary to his employees...
No...no... employer does not deduct taxes in every case, he deducts it only if the total taxable salary that he pays exceeds the maximum income on which 0 tax is to be paid...
Now, after deducting
As you know, we have to pay tax to the govt on the income that we earn.
So what the government has done, they have instructed and mandated employers to deduct taxes from salary while paying them to employees and then depositing these taxes to the government themselves.
This has brought efficiency into the system as instead of running after every individual the government has to only watch employers, which are relatively less than the no of employees.
The employers pay salary periodically to their employees after they have deducted tax from it. This is called TDS (Tax Deducted from Source).
Form 16 is a certificate which specifies information of tax deducted from source by the employer while paying salary to the employee and tax deposited with the government.
Form 16 has 2 parts, A and B.
Part A has information of the employer & employee, like name & address, PAN and TAN details, period of employment, details of TDS deducted & deposited with the government.
Part B includes details of salary paid, other incomes, deductions allowed, tax payable etc.
If the employee has incomes apart from salary as well, like bank interest, he has to furnish this information to the employer so that TDS is deducted on the total income of the person and not only on salary.
So in conclusion, you can say form 16 is a certificate issued by the employer to the employee, which specifies details of salary earned, TDS deducted by the employer and TDS paid to the government.
Like form 16, there is another form called 16A. This is alo a TDS certificate but is slightly different from form 16.
While form 16 is for income earned through salary, 16 A is for income other than salary.
Form 16A is issued to you when a bank deducts TDS on your interest income from fixed deposits, for TDS deducted on insurance commission, for TDS deducted on your rent receipts etc.
Form 16A is issued when TDS is deducted on any other income you receive that is liable for such deduction.
This form also has basic details like name and address of deductor/deductee, PAN/TAN details, challan details of TDS deposited, income you have earned, the TDS deducted and deposited.
