The tax-filing season is upon us and all the income tax jargons could make tax filing seem confusing. While Form 16 is a commonly expressed tax document, that you may have heard of, form 16A may seem different.
Before we go to what purposes each of these documents serve, it should be understood that they are both TDS certificates.
TDS or tax deducted at source, is the payment a company, institution or a person is required to make to the government at a certain rate if it exceeds the threshold limit. For example, when interest earned on fixed deposits exceeds Rs 40,000 (in the financial year 2019-20), the bank will deducted 10 percent tax on the maturity proceeds before crediting it to the customer.
Form 16 and 16A both provide details on TDS but on different kinds of income.
What is Form 16?
Form 16 gives a breakup of the taxes paid on your behalf by your employer on the income you made as part of your salary. Employers have the right to deposit taxes on your income to the government if it exceeds the exemptible limit. This also means that if your income (salary) is within the taxable limits of the income tax law for the year, the employer may not issue Form 16.
This certificate has two parts, namely Part A and Part B. Part A carries your details of the employee and the employer like name, address, PAN, TAN, employment period and the amount deducted as TDS on the employee's behalf.
Part B holds the breakup of salary paid, deductions allowed, etc that helps you with the ITR filing.
Form 16 has been simplified for the FY19 to make it easier for e-filing ITR. These forms in the new format will be made available to you by your employer before 10 July. If you had changed jobs in the financial year, you will be receiving separate Form 16s from each employer.
For any income you may have earned besides salary during the financial year, Form 16A serves as a TDS certificate.
For example, Form 16A can be issued by the bank for income earned from interest on your deposits made.
If you are a freelancer who earns income from client payments, your client will issue a Form 16A if TDS was deducted on your payment.
This can be issued by any institution that is allowed to deduct and deposit taxes on your income on your behalf. It is deducted on any income that is taxable, like the proceeds on maturity of a scheme.
Form 16A will include name and address of the deductor and the deductee, the PAN, TAN and details on the challan of the TDS deposited. Further it will include the details on the income you earned and the TDS deposited on such income.
If you want to find out all the information on the TDS deducted on all the income earned on your PAN, you can refer to Form 26AS to check if all the said tax deduction was deposited with the government.
This can be downloaded from the income tax department's official website, by simply logging in to your account and finding it under the "view tax credit statement" option in "my account" tab. You should find a separate Form 26AS for each financial year.
Note that your date of birth is the password for the downloaded file.
You can contact the respective institution or the tax authority if tax was wrongly deducted.
Now that you know that tax has already been paid on your behalf, you may be wondering why you still need to file your income tax returns.
While your employer or bank may have deducted the tax on your behalf according to the applicability of the Income Tax Act, their knowledge of your income is limited to that particular transaction or salary only.
You may have other income sources or you many have other losses that you can write off against the earnings made.
You will be able to claim any refunds on tax already paid (if applicable) only if you file your returns.
Further, you are required by law to file your ITR if your income for the year exceeds the taxable limit.