Form 16
Form 16 is issued by the employers to the employees after deducting the TDS from their salary. Every employer must issue Form 16, if TDS has been deducted from the employee’s salary as per the law under the IT Act, 1961.
Form 16 is a certificate of proof under section 203 of the Income-tax Act, 1961 that TDS has been deducted from employee’s salary. The employees then use it for filing Tax Returns. Form 16 has two parts; ‘Part A’ and ‘Part B’. Let us see what they contain:
Part A- It includes the following details:
• Name and address of the Employer/Deductor
• Name and address of the Employee/Deductee
• Certificate number
• PAN and TAN (Tax deduction account number) of the Deductor/Employer
• PAN of the Employee/Deductee
• Assessment Year
• Tenure of Employee with the Employer
• Summary of the amount paid/credited and tax deducted at source quarterly, in respect of the Employee
• Details of the tax deducted and deposited in the Central Government Account through Book Adjustment/Challan
Part B- It includes the breakup of the gross salary, any other income and various deductions:
• Gross Salary paid
• Deductions such as Entertainment Allowance, Tax on employment
• Income chargeable under the head ‘Salaries’
• Net deductions under Chapter VI-A that includes various sections such as 80C, 80CCC, 80CCD, 80E, 80G, 80TTA etc
• Total Income and Tax on total income
• Education cess @ 3% on Tax on total income
• Final tax payable
Click here to download a sample Form 16
Form 16A
Form 16A is also a TDS certificate issued by an employer to the employee on a quarterly basis. However, it shows the deductions on the income other than salary such as professional fees, rent received, bank interest payments etc.
Form 16A includes the following details:
• Name and address of the Deductor
• Name and address of the Deductee
• PAN and TAN (Tax deduction account number) of the Deductor
• PAN of the Deductee
• Total income earned other than salary/Summary of payment
• Details of the tax deducted and deposited in the Central Government Account through Book Adjustment/Challan
• Assessment Year
Note: Form 16A is generally issued by banks for the TDS deducted on the interest income earned on Fixed/ Recurring Deposits.
Click here to download a sample Form 16A
Difference between Form 16 & Form 16A
• TDS deducted on the salary is indicated in Form 16. On the other hand, Form 16A indicates the TDS deducted on the income other than salary.
• Form 16 is issued on an annual basis. On the other hand, Form 16A is issued quarterly.
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Form 26AS (Tax Credit)
As we have seen above, Form 16 and Form 16A are used by the employer for TDS deduction. It’s imperative to know from an employee’s perspective that the tax deducted from their salary is paid to the IT department or not. This is where Form 26AS comes into the picture.
Form 26AS is a consolidated tax credit statement required to be issued under Section 203AA of the Income Tax Act, 1961. It includes the following details:
• Tax deducted by deductors on behalf of Tax Payer
• Tax collected by collectors on behalf of Tax Payer
• Advance/ Self-Assessment tax deposited by Tax Payer
• Refund paid by Income Tax Department to the Tax Payer
• AIR (Annual Information Report) Transactions
It can be generated from TRACES (TDS Reconciliation Analysis and Correction Enabling System) website.
Click here to access TRACES website
Advantages of Form 26AS
• It helps you to cross check the deductions done under Form 16 and Form 16A thereby finding out discrepancies (if any).
• It helps you to confirm whether the tax deducted from your income is been paid to the government.
If you are working for a company/firm; based on your income, tax is deducted at source i.e. TDS by your employer from your salary.
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What is TDS?
As the name suggests, TDS is tax deduction at the source of income. It is an indirect method of tax collection. Income such as salary, bank interest payments, lottery, rent payments, etc comes under the scope of TDS. As per the IT Act, the entity that makes the payment to the recipient of the payment is required to deduct a certain portion of the payment in the form of tax at the specified rate and deposit it to the government. This entity who deducts the tax could be a person or an organisation and is generally referred to as a Payer/Employer/Deductor and the person who pays the tax is a Payee/Employee/Deductee.
Once TDS is deducted, filing Returns with the tax Department, well in time is the next step in the process. While filing the tax return, you should have the legitimate proof of TDS from your income, which is provided by your employer as per the rules and regulations of the Income Tax Department. This is issued in a well-defined format provided by the Income Tax Department and is commonly referred to as Form 16. Apart from Form 16, there are few other essential forms concerning TDS; Form 16A and Form 26AS. Let us understand the purpose behind each one of them and how they are important to us.
Thaxnks for this informatoin
For more information for this visit us on : https://www.trutax.in/gst-returns-filing
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