July 15, 2024
Form 16 and Form 16A Means and Difference

Form 16 and Form 16A Means and Difference

Form 16 and Form 16A

Before Filing Income Tax Return, it is necessary to obtain Form 16, if working with an organisation, or Form 16A, in case of payment other than salary. Both Form 16 and From 16A is a TDS certificate which gives an assurance that the amount of TDS deducted, Nature of Payment and TDS Deposited with the Income Tax Department. So if Nil TDS has been deducted then these forms are not required to be issued.

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What is Form 16?

Form 16 is for a person employed in an organization, who draws a monthly salary. In case your salary is above the maximum limit which is not chargeable to tax, the employer deducts a certain amount of money before handling salary to you. The process is called tax deduction at source.

It is an important document that is in accordance with the rules and regulations laid down by Section 203 of the Income Tax Act for Tax Deducted at Source from Income chargeable under the head “Salaries”.

At the year-end, the employer is required to provide a detailed statement of Salary Payments and TDS deducted thereon. This statement is termed as From 16.

Form 16 is very necessary as it acts as salary proof and tax paid to the government. Form 16 provides complete details of the salary details of the employee along with necessary adjustments for income tax. It is applicable to only salaried people.

In case, if you have worked in two different organization in a single year than you have to obtain two different Form 16s from the two companies in order to file the IT returns. If your previous employer denies issuing Form 16 then the best option is to file Form 12BB and submit it to your new employer. The employer will take into account the previous salary you earned while deducting tax.

You can also revise and submit fresh Form 16 in case there is an error in Figures. However, it is not compulsory to give the form 16 to the employee if there are no TDS deducted.

Changes in Form 16

Income Tax Department recently tweaked the Form 16 by asking more details of the employee. The following details need to be additionally given from the current financial year:

  1. A separate line item is inserted to provide the details of the earnings from the past employer. Earlier no separate disclosure from the earnings from the past employer was required but now under a new form, both earning from current employer and past employer to be shown separately.
  2. Standard Deduction line item added which was not there.
  3. Only Income (loss) from the house property and income from other sources can be disclosed in Form 16 and employer will calculate the tax on the basis of these three incomes only. Tax on Capital Gains needs to be paid directly by the taxpayer.
  4. Tax-exempt allowances under section 10 of the Income-tax Act needs to be shown in details. Earlier there was no such space and filing exempt allowances details were on employer’s discretion but now the same is mandatory and all the exempt allowances under section 10 need to be filled.

What is Form 16A?

This form is for a non-salaried employee who works as a professional for an organization. This is used in various cases where tax is deducted. Same as Form 16, deductor needs to issue form 16A to person to whom TDS is deducted at the end of the financial year.

Form 16A is also an important document that is in accordance with the rules and regulations laid down by Section 203 of the Income Tax Act for Tax Deducted at Source from the Income other than Salary.

Say, for example, interest earned on bank fixed deposits, will result in tax being deduced at source, subject to the interest income being over Rs 10,000. In such cases, each financial bank issues TDS certificate to the customers.

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 subcontractors;
  • 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 India;
  • commission, remuneration or prize on sale of lottery tickets; rent;
  • fees for professional or technical services;
  • the 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;
  • the income of Foreign Institutional Investors from securities referred to in section 196D

Difference between Form 16 and Form 16A

The difference between Form 16 and Form 16A is that the TDS deducted on Salary is reflected in Form 16 and TDS Deducted on Other Payments is reflected in Form 16A. Moreover, Form 16 is generally issued annually whereas Form 16A is issued quarterly.

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