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Form 16A | Meaning and Definition

What is Form 16A?

The documentation of tax deduction at sources, Form 16/ 16A, is produced when the employer deducts tax on account of the individuals. These documents detail TDS / TCS for a variety of operations involving the deductor and the deductee. The issuance of these credentials to tax-paying citizens is required.

TDS Certificates are also inferred as Form 16A. While Form 16 is exclusively for gross salary, Form 16A is for TDS on Non-Salary Earnings.

When a bank offsets TDS on your investment earnings via fixed funds, for TDS collected on insurance commissions, or for TDS collected on your rent receipts, for instance, a Form 16A will be provided to you. In conclusion, TDS is subtracted from any other earnings you get that are taxable.

This documentation also includes the name & location of the deductor/deductee, PAN/TAN information, and TDS challan information. It also contains information on the income you’ve earned, as well as the TDS deducted and deposited on that income.

Form 26AS contains all of the information included in this form. You can use this to file your tax return.

In the case of Form 16, however, this is not the case. Only TDS is deducted by the employer, and the details of Form 16 are available on Form 26AS. Both forms are crucial and must be completed to file your return correctly. You can also see the details of your income, including how far TDS has been collected at what percentages.

Form 16A Format

The components and important part of Form 16A are:

  1. Name and PAN of employee, TAN of employer-  This must be from the bank from which TDS will be deducted at source or insurance companies where TDS is applicable.
  2. Name and PAN of deductee- These details will be of the individuals who are getting benefits of TDS deduction.
  3. Date of payment, amount of payment, and the nature of payment.
  4. The receipt number of TDS payments.

All these details need to be mentioned in Form 16A at the time of the Income tax returns. The form 16A is generally a proof carrying all amounts of TDS deposited to Income Tax department. 

What is the importance of Form 16A

Form 16A plays an important role while filing Income tax returns, especially when the employee has additional sources of income other than salary.

Here are the key parameters highlighting the importance of Form 16A:

1. Filing of Income tax returns- The information provided in Form 16A helps employees to file Income Tax returns accurately. It helps employees to report their total income including salary and other sources.

2. Tracking of TDS- It helps every individual to keep a track on Tax deducted at source(TDS) on their income. It provides a whole summary of TDS deducted at source.

3. Income Proof- This form serves as a proof of total earnings of an individual from all the sources. This source is widely accepted by government agencies and financial institutions.

4. Loan Applications- This form plays an important role in supporting the loan applications. Financial intermediaries often require a track on assets and liabilities of an individual to check their loan repayment guarantee.

How to fill Form 16A?

While filling this form certain key pointers have to be kept in mind:

  1. Provide the name and address of deductor, while filling the address correct Postal code must be mentioned.
  2. It is necessary to fill the  TAN of the deductor. 
  3. Information of acknowledgment numbers must be mentioned.
  4. State the nature of payment, whether it is professional or contractual.
  5. Payment codes must be mentioned.
  6. Period must be mentioned in which the form is filled.
  7. After filling all these details TDS deduction details need to be mentioned.
  8. Amount of TDS must be mentioned in words.

For which kind of payment Form 16A is issued?

Form 16A is issued for following types of payments including:

  • Interest payments
  • Professional fee charged
  • Commission or brokerage payments

In simpler terms, Form 16A is issued for all the following payments except:

  • Salary Payments (For this purpose Form 16 is issued)
  • Sale of any property (Form 16B is issued for sale of any property)
  • Rent payments (Form 16C is issued for this purpose)

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