Form 16, Form 16A, and Form 16B?

Form 16 is a form issued by Employers for their employees as per the regulations under section 203 of the Income Tax (IT) Act, 1961. Form 16 is also known as the salary certificate. It includes all the information about your salary during the financial year. It also mentions the details of the tax deducted at source (TDS).

What is Form 16?

As issued by your employer, it summarizes the tax deducted by your employer from your annual salary. This TDS is calculated based on the income tax slab applicable during a particular financial year. The TDS is deducted on your behalf and it is your employer’s responsibility to deposit this amount with the government authorities. It certifies the TDS and confirms that the same is deposited with the concerned authorities.

Why is Form 16 Important?

Form 16 primarily serves as evidence of timely tax payments. Additionally, it confirms the validity of an employee’s income that has been registered and validated with the Indian government. Individuals who earn a salary of ₹2.5 lakh or less in a fiscal year (FY) are free from paying income tax. Anyone making more money is required to pay taxes and qualifies for Form 16.

Components of Form 16

Form 16 is an important form to have if you are a salaried individual. Here are the components of this form:

a. Refunds or balance of taxes payable to or by the employee

b. Employer details: TAN, PAN, tax slips and so on

c. Tax payment information: Challan number, DD number etc.

d. Employee details like PAN

e. Tax deduction under section 191A

f. Salary and TDS details

e. Employer’s declaration of tax payment

What is Form 16A?

The Section 203 of the Income Tax Act of 1961 authorises the issuance of Form 16 as a certificate for tax deducted at source (TDS) from salary income received during the fiscal year. It is given by the employer in exchange for the tax withheld from an employee’s pay. The government receives the tax deduction and holds it against the employee’s PAN.

The TDS certificate gives a thorough breakdown of the employee’s wage payment and the tax withheld from it. Furthermore, Form 16 will reflect this information if an employee chooses the old income tax regime and produces investment documents. Form 16 is divided into Form 16 A and Form 16 B.

Following are the components of Form 16A for salaried employees

• Employer’s and employee’s personal information such as name, address, Permanent Account Number (PAN), and Tax Deduction and Collection Account Number(TAN)
• Assessment year
• Assessment year
• Period during which you were employed with the company
• Summary of the salary received
• TDS date
• TDS deposit date
• Summary of TDS and quarterly deposits with the IT Department
• TDS payment acknowledgement number

The part A may be generated on the TRACES portal of the IT Department. It includes details of the paying bank’s Basic Statistical Returns (BSR) code and challan numbers for future reference. Every page of this form is digitally signed by the deductor.

What is Form 16B?

Form 16B attests to the fact that tax has been withheld at the source from income derived from the sale of immovable property—other than agricultural land—including buildings or portions of them. The property buyer has already deposited the TDS with the income tax division.

Components of Form 16B

• Total salary breakup such as leave travel allowance (LTA), house rent allowance (HRA), gratuity, leave encashment, and others
• Allowed exemptions like HRA, children’s education and hostel fees, conveyance, medical, and others
• Income tax deductions under section 80C, 80CCC, 80CCD for contributions in tax-saving instruments
• Other deductions like health insurance premium (Section 80D), donations (80G), and interest on education loan (80E )
• Net taxable salary after deductions under Chapter VI

Therefore, Form 16 and Form 16A are not exactly the same. The latter is a part of the former. Every salaried individual is eligible for Form 16. However, if you do not fall under the taxable income bracket, the employer is not obliged to issue Form 16.

What is the difference between Form 16 and Form 16A?

Certificates of tax deducted at source from your income from various sources are shown on Form 16 and Form 16A.

Form 16: Your salary’s TDS certificate

The TDS certificate or Form 16 is the most frequent financial document all working employees encounter when filing their income tax returns.

It is a certificate proving that tax was correctly withheld at the source from your wage and deposited in the government coffers.

Employees who get an annual salary of fewer than ₹2.5 lakh are free from income tax and do not receive a Form 16.

If a worker has many employers or changes employment within a fiscal year. If the employee’s salary exceeds the limit of ₹2.5 lakh, they will receive a separate Form 16 from each employer.

The TDS Certificate for Income Other Than Salary: Form 16A

A person may receive income from sources other than their pay, such as the interest earned on fixed-deposit assets, mutual funds, gold bonds, and further capital gains.

The returns are subject to income tax at a varying rate set by the government. Financial institutions must issue you the Form 16A TDS certificate because they are required to withhold tax at the source in this situation.

Anyone paying monthly rent for a building or piece of land of Rs. 50,000 or more is obligated to withhold tax at the source and deposit it into the central bank account. After that, the tenant must provide Form 16A to the property’s owner.

The employer of anyone receiving a commission for the sale of insurance products is likewise responsible for TDS and must provide the agent with Form 16A.

How to file Form 16 online?

Form 16 comprises of multiple details including the following:

• All section 10 exemptions and benefits
• Your entire taxable salary amount
• Information on all of the deductions under Section 16
• TDS is withheld from any income from the residential property during the assessment year.
• Other sources of income for which TDS is withheld during the assessment year

Information about each deduction allowed under Chapter VI-A of the 1961 Income Tax Act covers all deductions made according to Sections 80C, 80CCC, 80CCD 1 and 2, 80CCD 2 and 1, 80D, and 80E.

To file your ITR by filling Form 16, the following information is required:

• The employer’s TDS
• Company’s TAN
• Company PAN
• Name and location of the employer
• current assessment period
• Name and address of the taxpayer
• Customer’s PAN

It is noteworthy that even if your employer fails to withhold income tax at source or fails to provide Form 16, you are still required to file your income tax return. If you have worked for many companies over a fiscal year, requesting Form 16 from each company on time can be quite helpful.

How to File Form 16 for Salaried Employees?

It is necessary for earning individuals to complete Form 16. As a working professional, your employer must have requested you to disclose your investments and other sources of income. You must provide the relevant information to ensure that your Form 16 is pre-filled. For this, you should check and confirm those details while filling out your TDS claims.

The following information must be completed to obtain the certificate for salaried workers:

• Your gross salary
• Deductions such as professional tax, standard deduction
• Deduction under chapter VI A
• Deduction under section 80C for investments like life insurance premiums, PPF investments, etc.,
• Deduction under section 80CCC for contribution to pension funds
• Deduction for employee’s contribution under section 80CCD (1) to a pension scheme
• Deduction under section 80CCD (1B) for taxpayer’s self-contribution to a notified pension scheme
• Deduction under section 80CCD (2) for employer’s contribution to a pension scheme
• Deduction under section 80D for health insurance premium
• Deduction under section 80E for interest paid on loan taken for higher education
• Deduction under section 80G for donations
• Deduction under section 80TTA for interest income on savings account
• Total taxable income of the employee
• Rebate
• Tax amount after rebate
• Tax amount payable or refundable

The TDS claims process is straightforward if these fields are accurately filled out.

Eligibility criteria for Form 16

Anybody can generate and download Form 16 online for payments other than salary. So, having understood everything about Form 16, here is how to download it. First, you need to visit the Income Tax Department website. Then, under the ‘Forms/Download’ section, click on the ‘Income Tax Forms’ option. The following webpage will find two options under Form 16: PDF or fillable form. Select the appropriate option to avail yourself of the form.

How to Download Form 16 from TRACES?

Employers are the only ones who can use the Form 16 download process. Contrary to this widespread belief, salaried individuals can download their form from the TRACES website using their PAN. Before May 31st of each fiscal year, all companies must provide eligible employees with this form.

FAQs

To get Form 16 from TRACES, a user needs to follow the following steps:

• The taxpayers need to log into TRACES.
• Post login, the user needs to go to the Downloads tab.
• Form 16B will be available in that tab.
• Enter relevant details and fill each field prudently and click on Go.
• Having completed all steps, you can download Form 16B.

1. Who are eligible to receive Form 16?

Salaried employees earning taxable income are eligible for Form 16 if their employers deduct tax at source on their salary. If the annual income is lower than the minimum tax slab, tax deducted at source (TDS) is not applicable.

2. Is Form 16 a mandatory document for salaried employees?

Employers must provide Form 16 to the employees whose salary is subject to TDS. Form 16 lists earnings and taxes deducted in a financial year. It is essential for filing tax returns. The document also acts as an income proof needed for loan applications and visa processing.

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

Your employer can download the document from the TRACES website. You cannot download it yourself using your PAN.

4. What is Form 16 (Part A) for salaried employees?

Form 16 for salaried employees contains two parts, Part A and Part B.

Part A is a duly signed certification from your employer that they have deposited to the tax department on your behalf the tax you are liable to pay for your salary income.
It consists of:

• Your personal information (name, address, PAN)
• Employer’s details (the company’s name, PAN, TAN)
• Period of employment under your current employer
• Salary details
• Summary of TDS deducted and deposited quarterly (Deduction date, Date of Deposit, Challan Serial Number for each deposit)
• TDS payment acknowledgement number
• Assessment year for filing tax returns

5. What is Form 16 Part B for salaried employees?

Form 16 for salary employees provides information about salary breakup, other income the employee reported to the employer, applicable tax, tax exemptions, and deductions.

It contains the following information:

• Total salary, including the various components such as gratuity, house rent allowance, leave travel allowance, etc.
• Gross income from salary and other earnings the employee disclosed such as house rent, interests on investments
• Exemptions the employee is eligible for as per Section (10) of the Income Tax Act (ITA), 1961
• Deductions under the various sections of the ITA providing tax relief such as 80C/ 80CCC/ 80CCD, 80D, 80E, 80G etc.
• Net taxable income
• Applicable Education Cess and surcharges
• Rebates and reliefs under Sections 89 and 87
• Total tax payable
• Total tax paid
• Balance tax due, if any

6. What are the different types of Form 16?

Other than Form 16 for salary earned, you can receive Form 16A and Form 16B for your other incomes. Form 16A records TDS deducted on incomes such as:

• Interests generated on bank deposits
• Rents received
• Payment for consultancy services/ Professional fees
• Insurance commission

Form 16B certifies the TDS on revenues from a property sale, deducted by the buyer from the property price.

7. How to Download Form 16?

Employers can download Form 16 from the TRACES website https://www.tdscpc.gov.in/app/login.xhtml. They need their registered user id and password to log in and find the form under the ‘Downloads’ tab.

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

If you have changed jobs during the financial year, you will get an individual Form 16 from each employer.

9. What should a receiver check-in Form 16?

After you receive your Form 16, you must check if all the details furnished are correct, including:

● Your name, address ● PAN ● Income details ● Deductions and exemptions availed ● Tax deducted ● Tax due

10. How to get Form 16 for previous years?

If you need an earlier Form 16, you can request your employer to issue a duplicate.

11. Is Form 16 and Form 16A similar?

Form 16 furnishes TDS details on salary income. Form 16A is a TDS certificate for tax deducted on income other than salary.