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Faster, easier and secure gateway to e-file income tax return

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Recognizing the Difference Between Form 16 and Form 16A in India

Form 16 is a certificate from the employer certifying that TDS has been deducted from the employee’s salary. It is issued annually to the salaried individual. As per section 203 of the Income Tax Act, 1961 the employer is liable to issue a certificate for deducting TDS, this certificate is Form 16.

Form 16 carries all the necessary details that help the employees in filing their Income Tax Return (ITR). It is also known as TDS certificate or Salary Certificate. The TDS collected by the employer is deposited with the government. Form 16 shows the TDS collected from the salaried individual only, TDS deducted from any other source of income is shown in Form 16A and Form 16B.

Purpose and Functions of Form 16

Form 16 is an important document and it is used for following purposes:

  • To file ITR, as this document contains all the required information regarding tax deductions.
  • To verify the TDS collected by the employer and the TDS amount deposited to the government after verifying the details with Form 26AS.
  • It is also used as an income proof while taking home loans from banks and financial institutions.

The Various Components of Form 16

The important components that can be furnished from Form 16 are as follows:

  • Employee’s personal details like name, Permanent Account number (PAN) etc.
  • Personal details of an employer like name, PAN, Tax Deduction and Collection Account Number (TAN).
  • Employee’s salary details.
  • Details of TDS refund and Tax Deducted at Source (TDS).
  • Details of surcharge and education cess deducted.
  • TDS payment details such as Demand Draft Number, Cheque Number, and Challan Number etc.
  • The tax deducted from total income.

Sections of Form 16

Form 16 is divided into two parts; Part A and Part B. Part A of form 16 contain the personal detail of both employers and employee. It contains the Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) of both employer and employee.

Part A includes the following information:

  • Name and address of both employer and employee.
  • Permanent Account Number of both employer and employee.
  • Employer’s Tax Deduction and Collection Account Number.
  • Assessment year.
  • Details of TDS deducted.
  • Period of employment.

Part B of Form 16: It includes consolidated details of the salary paid to an individual during the financial assessment year. This part includes the deductions under section 80C, 80CCC, and 80CCD.

Information included in part B are as follows:

  • Gross salary
  • Exempted allowances under section 10 of the IT Act (conveyance allowance, house rent allowance etc).
  • Deduction under section 80C, 80CCC and 80CCD (contribution towards PPF, Life Insurance Policies).

Online Verification of Form 16

Now an employee can verify his form 16 online through TDS Centralized Processing Cell (CPC). Click on ‘Taxpayer’ and select ‘verify TDS certificate’ for verifying the amount deposited against TDS by the employer.

Submit the below-mentioned details:

  • Employee’s PAN Number
  • Employer’s TAN Number.
  • TDS Certificate Number.
  • Deducted TDS amount as per certificate.

Click on ‘Validate’ and verify your Form 16.

Understanding Form 16A

Form 16A is a certificate for TDS collected from any income other than salary, as per section 203 of the Income-tax, 1961. In Form 16A TDS is collected on the total extra earnings (income from other). Under income from other sources, interest earned from a savings account, interest earned from post office savings account etc. are levied a TDS if the total earnings exceed the exemption limit.

The Various Components of Form 16A

The important components that can be furnished from Form 16A are as follows:

  • Details of the deductor like name, TAN and PAN number.
  • Name, TAN, PAN number of the taxpayer.
  • Receipt number of the TDS payment.
  • Date of payment, the amount paid and nature of the payment.

The Requirement for Form 16A

Form 16A is required by an individual while filing Income Tax Return (ITR). Individuals who have an income from other sources i.e. other than salary must file form 16A. This document is used for verification by banks and other financial institutions while processing for a home loan, personal loan, vehicle loan etc.

Online Verification Procedure of Form 16A

Form 16A can be verified online by visiting the TDS Reconciliation and Analysis Correction Enabling System (TRACES).

An assessee can verify the aspects of TDS statement by furnishing the following details:

  • Select the financial year.
  • TAN Number of deductor.
  • PAN Number of the deductee.
  • Certificate Number.
  • Total income tax deducted.

Difference Between Form 16 and Form 16A:

BASIS FORM 16 FORM 16A
Meaning It is a certificate under section 203 of the Income Tax Act, 1961 which shows TDS from the income chargeable under the head ‘salaries’. It is a certificate under section 203 of the Income Tax Act, 1961 which shows the TDS at the source of income other than salary.
Eligibility Any individual who earns regular income in the form of salary. Any individual who is self-employed or professional.
Components
  • Employee personal details like name, Permanent Account number (PAN) etc.
  • Personal details of an employer like name, PAN, Tax Deduction and Collection Account Number (TAN).
  • Employee’s salary details.
  • Details of refund and Tax Deducted at Source (TDS).
  • Details of surcharge and education cess deducted.
  • TDS payment details such as Demand Draft Number, Cheque Number, and Challan Number etc.
  • The total income tax deducted.
  • Details of deductor like name, TAN and PAN number.
  • Name, TAN, PAN number of the taxpayer.
  • Receipt number of the TDS payment.
  • Date of payment, amount paid and nature of payment made.
Online verification It can be verified online. It can be verified online.
Periodicity It is issued annually. It is issued quarterly.

Form 16 is a salary certificate which is issued by an employer annually showing the details about the Tax Deducted at Source (TDS) for the salaried individual. Form 16A, on the other hand, is TDS certificate which is issued quarterly for the individuals who have income from any other source i.e. other than salary. Both the forms can be verified online on the TRACES website.

Frequently Asked Questions

Q. Is it necessary for an employer to issue Form 16 to the employee, in case no tax has been deducted on employee’s salary?
Form 16 is a certificate of TDS, in case no tax has been deducted then there is no compulsion of the employer to issue Form 16.
Q. Who will issue form 16 for a pensioner, receiving a pension from the bank?
If a pensioner is receiving pension through a bank, then in such case the bank will issue form 16 to the pensioner.

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