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Difference between Form 16 and Form 16A

Form 16 is issued by employers to employees, detailing TDS on salary, while Form 16A is issued for TDS on non-salary income like interest and rent.

  • 21,423 Views | Updated on: Jul 22, 2024

Tax forms play an essential role in the financial field for employees and businesses in India. Among these, Form 16 and Form 16A are frequently encountered when dealing with Tax Deducted at Source (TDS).

Key Takeaways

  • Form 16A details the nature of non-salary payments and TDS deducted.
  • Form 16 is issued annually, typically after the financial year ends, while Form 16A is issued quarterly, aligning with TDS return filings.
  • Form 16 helps employees file their income tax returns accurately.
  • Form 16A assists individuals and entities in reconciling non-salary incomes.

Although both forms are integral to the TDS framework, they are used in different scenarios and have distinct functions.

What is Form 16?

Form 16 is a significant document issued under the Income Tax Act of India. It serves as proof of tax deduction at source (TDS) from an employee’s salary by their employer. It is a certificate that contains details of the salary earned, the tax deducted, and other relevant information required for filing income tax returns.

For employees in India, the employer deducts income tax from their salary every month based on the applicable tax slab. These deductions are made under the provisions of the Income Tax Act 1961. This form records these deductions and gives employees a summary of their taxable income and tax liability.

What is Form 16A?

Form 16A is a TDS certificate issued by deductors to taxpayers, indicating the amount of Tax Deducted at Source on income other than salary. It is a statement that serves as proof of the tax deducted and deposited with the government by the deductor. Form 16A primarily applies to individuals who receive income from interest, rent, commission, professional fees, etc.

Difference Between Form 16 and 16A?

Understanding the differences between Form 16 and Form 16A is crucial for individuals navigating the diverse landscape of income and property transactions. Each form serves a unique purpose, catering to income tax compliance and financial transparency.

Aspect

Form 16

Form 16A

Applicability

Salary Income

Non-Salary Payments

Issuing Authority

Employer

Deductor (other than employer)

Sections of the Income Tax Act

Section 203

Section 203

Purpose

Proof of TDS on Salary

Proof of TDS on Non-Salary

Nature of Income

Salary Income

Interest, Rent, Commission, etc.

Details of Parties

Employer and Employee

Deductor and Deductee

Importance of Form 16

Form 16 is a certificate employers provide to employees, encompassing a comprehensive overview of the individual’s income and tax deductions for a specific financial year. Some of its importance are:

Acts as Proof of Income

Form 16 is a comprehensive proof of income for salaried individuals. It provides a clear breakdown of the salary structure, making it easier for employees to understand their earnings during a specific financial year.

Facilitates Tax Filing

Individuals must provide details of their income and taxes paid when filing income tax returns. Form 16 simplifies this process by consolidating all necessary information. It ensures accuracy in tax filings and minimizes the chances of errors.

Allows Verification of TDS

Form 16 is evidence of the Tax Deducted at Source (TDS) by the employer. It enables employees to cross-verify the TDS amount mentioned in the form with their Form 26AS, ensuring that the correct amount has been deducted and deposited with the government.

Enables Loan and Credit Card Applications

Financial institutions often require proof of income when processing loan or credit card applications. Form 16 is a reliable document for individuals to provide evidence of their income, making the application process smoother.

Allows Easier Auditing

Form 16 is a valuable document for individuals who undergo tax audits. It provides a comprehensive overview of the financial transactions related to salary, making it easier for auditors to assess the individual’s tax liabilities.

Components of Form 16

Form 16 functions as a certification wherein the employer verifies details about the annual salary earned and the amount of TDS deducted. It comprises two sections, Part A and Part B.

Part A contains particulars about the employer and employee, such as names, addresses, PAN and TAN (Tax Deduction and Collection Account Number) details, the employment period, and specifics regarding TDS deductions and deposits made with the government. Part B outlines property tax concerning the TDS deduction.

Issued by employers to salaried individuals, Form 16 confirms when tax is deducted from the employee’s salary and acknowledges that the deducted tax has been remitted to the income tax department. The employer must provide this certificate by June 15 of the relevant year.

Importance of Form 16A

Form 16A is a TDS certificate issued by entities other than employers, documenting tax deductions made at the source. Unlike Form 16, which is specific to salaries and issued by employers, Form 16A encompasses a broader scope, including deductions made on income other than salaries.

Helps Document Non-salary Income

Unlike Form 16, which focuses on salary income, Form 16A extends its scope to document TDS on income sources beyond salaries. It includes interest income, professional fees, rent, and other payments attracting TDS.

Ensures Tax Compliance

Form 16A is tangible proof of TDS compliance for deductors and deductees. It ensures that the deducted tax is accurately documented and deposited with the government, fostering transparency and adherence to tax regulations.

Facilitates Accurate Tax Filings

For individuals receiving income subject to TDS other than salary, Form 16A is indispensable during tax filing. It provides a clear breakdown of TDS on various transactions, enabling accurate reporting and minimizing the risk of errors.

Enables Verification of Financial Transactions

Entities requiring proof of income for various financial transactions, such as property transactions, often seek Form 16A. The document substantiates the income details and the corresponding TDS, establishing the credibility of financial transactions.

Eases Auditing Processes

In the event of tax audits, Form 16A plays a vital role in providing a comprehensive record of TDS on non-salary income. It helps auditors in assessing an individual’s tax liabilities accurately.

What are the Components of Form 16A?

Form 16A is a crucial document in the Indian taxation system. It is specifically designed to capture details related to Tax Deducted at Source (TDS) on income other than salary. Deductors issue this form to deductees, providing a comprehensive breakdown of the TDS deducted and other relevant financial details.

  • Employer’s name, PAN, and TAN
  • Employee’s name, PAN, and TAN
  • Payment details
  • TDS payment number
  • Date of deposit and deposited tax amount
  • These details are also available in Form 26AS

How to File Form 16 Online?

In the digital age, Filing Form 16 online has become seamless, offering individuals a convenient and efficient way to comply with income tax regulations.

  • Log in to the website using your credentials.
  • Navigate to the ‘e-File’ section and select ‘Prepare and submit ITR online.’
  • Choose the appropriate Income Tax return Form and assessment year.
  • Provide the requested details and then click on the ‘Submit’ button. (You will be prompted to upload all the required forms, including Form 16.)
  • After successful submission, a message confirming the ITR submission and processing will be displayed.

Following this, you need to e-verify your ITR. Three methods are available for e-verifying the ITR in this manner. If the return is not e-verified, you must print, sign, and return the ITR-V form (password protected) to the Centralized Processing Centre (CPC) within 120 days of the e-filing date.

Eligibility Criteria for Form 16

Form 16 is issued by employers to employees and is crucial in simplifying the tax filing process. However, only some taxpayers are eligible to receive Form 16.

Salaried Individuals

The primary eligibility criterion for Form 16 is being salaried. If you are employed and receive a salary, your employer must provide you with Form 16. This document outlines the details of your salary, allowances, deductions, and TDS.

Income Tax Deductions

Individuals who have experienced TDS on their salary are eligible for Form 16. TDS is applicable when the annual income exceeds the basic exemption limit and the employer deducts tax at the relevant rates.

Employer Obligation

Employers issue Form 16 to their employees. Therefore, individuals employed in the formal sector, whether by a private company, government organization, or any other entity, are eligible to receive Form 16.

PAN And TAN Compliance

Employers must possess a Tax Deduction and Collection Account Number (TAN), and the employee must have a Permanent Account Number (PAN). These compliance factors are integral to the issuance of Form 16.

Final Thoughts

Form 16 and Form 16A play distinct yet crucial roles in income tax compliance, catering to different facets of income and financial transactions. A comprehensive understanding of these forms is essential as taxpayers explore the complexities of tax regulations. Whether documenting salary income, non-salary payments, or property transactions, individuals can leverage these forms to ensure accurate reporting, transparency, and adherence to regulatory norms in their income tax filings.

FAQs on the Difference Between Form 16 and 16A

1

What is the difference between Form 16 and 16A?

Form 16 is issued by employers to employees and details TDS deducted on salary income, including a breakdown of earnings and tax deductions. In contrast, Form 16A is issued for TDS on non-salary incomes such as interest, rent, and professional fees, providing details on the nature of payments and TDS amounts.

2

Who is eligible to receive Form 16?

Form 16 is typically issued to salaried individuals by their employers. If you are employed and receive a salary, you can receive Form 16. It provides a detailed breakdown of your income, allowances, deductions, and TDS (Tax Deducted at Source).

3

Is Form 16 a mandatory document for salaried employees?

Yes, Form 16 is a mandatory document for salaried employees. Employers are obligated to issue Form 16 to their employees. It serves as proof of income, provides details on TDS deductions, and is crucial for filing income tax returns.

4

How to get Form 16? Can I download Form 16 online?

Employers typically provide Form 16. You can obtain it from your employer at the end of the financial year or download it from their online portal if they provide such a facility.

5

What is Form 16 part A for salaried employees?

Form 16 Part A includes details about the employer and employee, such as the employer’s names, addresses, PAN (Permanent Account Number), and TAN (Tax Deduction and Collection Account Number). It is usually generated and provided by the employer.

6

What is Form 16 Part B for salaried employees?

Form 16 Part B provides a detailed breakdown of the salary, allowances, deductions, and TDS for the financial year. It complements Form 16 Part A, which together constitute the complete Form 16 issued by the employer.

7

What are the different types of Form 16?

Form 16 primarily consists of two parts: Part A and Part B. Part A is generated by the employer and includes basic details, while Part B provides a detailed breakup of salary and TDS. There are no different types of Form 16; it is a consolidated document.

8

How to download Form 16?

You can download Form 16 from your employer’s online portal, which is typically available at the end of the financial year. Log in to the portal, navigate to the relevant section, and download the form.

9

What if I worked under multiple employers in a financial year?

If you have worked under multiple employers in a financial year, you should obtain Form 16 from each employer. Each Form 16 will detail the income, allowances, deductions, and TDS for the respective period of employment.

10

What should a receiver check in Form 16?

The receiver should carefully check Form 16 for accuracy. Verify personal details, ensure the breakup of salary and deductions is correct, and cross-check the TDS deducted with the actual salary slip.

11

How to get Form 16 for previous years?

Form 16 for previous years can be obtained from your current or previous employers. You may request it from the payroll or HR department, and they should provide the relevant forms for the respective years.

12

Is Form 16 and Form 16A similar?

No, Form 16 and Form 16A are different documents. Form 16 is for salaried individuals and includes details of salary income, allowances, deductions, and TDS. Form 16A is typically for non-salary TDS transactions, such as interest income.

13

I cannot download Form 16 /16A as the number of pans for which Form 16/16A was submitted was higher. However, the PDFs generated were fewer. What should I do?

If there is a discrepancy in the number of PANs submitted and PDFs generated, you should contact your employer or the concerned authority to rectify the issue. Ensure that all PANs are accounted for in the generated forms.

14

How to Verify the Authenticity Of Form 16/16A/16B/16C Online?

To verify the authenticity of Form 16/16A/16B/16C online, use the TRACES (TDS Reconciliation Analysis and Correction Enabling System) platform provided by the Income Tax Department. TRACES allows you to verify and download authenticated forms.

15

How Can I Get My Form 16A/16B/16C?

Form 16A, Form 16B, and Form 16C are usually provided by the deductor (employer or buyer) to the deductee (employee or seller). You can obtain these forms from your employer or the party involved in the transaction, such as property sales or non-salary payments.

16

Who Receives Form 16A?

Form 16A is received by individuals and entities with TDS (Tax Deducted at Source) deducted on income other than salary. It includes interest on securities, dividends, rental income, professional fees, and commissions.

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Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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