How are Form 16 and Form 16A different?

Filing taxes is easy. But that happens when you know which form is required.

For many people, their salary is their sole source of income. Salaried employees also file tax returns, and TDS is deducted from their salaries. However, some people have other sources of income, such as investments, savings, etc.

Although both categories of people will file taxes, the forms issued to them will be different.

This article will help you understand the differences between Form 16 and Form 16a.

 

Understanding Form 16 and Form 16a

How are Form 16 and Form 16a similar?

Form 16 and Form 16a can be used to calculate the amount of tax to be paid. Both of them can be verified online on the Income Tax Department portal.

Do Form 16 and Form 16a differ from each other?

Yes. The two forms have different functions, components, eligibility criteria, issuers, and frequencies.

What is Form 16?

Form 16 is a certificate issued to the employees of a company. It is proof that TDS was deducted from their salaries. Form 16 is given out by the employer and has all of the information about the employee’s income and TDS.

Form 16 is divided into two parts: Part A and Part B.

Information about the TDS and the employee’s PAN and TAN details are included in Part A. Part B contains the details of the employee’s salary structure. This is done by the employer.

• The components of Part A are as follows:
• Employer details that include TAN, PAN, name, and address
• Employee details that include PAN
• Information about TDS is verified by the employer 
• The components of Part B are as follows:
• A detailed breakup of the employee’s salary.
• List of exempted allowances as mentioned under Section 10.

Who is eligible for Form 16?

The Finance Ministry of India laid down regulations specifying the eligibility for Form 16. The rule says that all people’s incomes falling under taxable brackets become eligible for Form 16.

But there are times when TDS is not deducted. If an employee’s annual salary is less than Rs 2.5 lakh, no deductions are made. In these situations, the employer is not required to give the worker a Form 16.

Only salaried people don’t qualify as “professionals.” Freelancers, businesspeople, interns, and remote workers are professionals too. Do they also get Form 16? Or is there another certificate for them?

There is another proof of funds known as Form 16a.

Important: There is no connection between Form 16a and Part A of Form 16.

What is Form 16a?

Form 16a is a certificate issued quarterly. It is primarily used to give information about the TDS deducted from sources of income other than salary. These include rent, commission, etc. The components of Form 16a are also found in Form 26AS.

Unlike Form 16, Form 16a is issued by the deductor. The form reflects the earnings and income tax deduction for the particular financial year. One can also download the form from the Income Tax Department website.

When is Form 16a applicable?

Form 16a is given when TDS is deducted from other sources of income. For instance, a person wins a certain amount of money in a lottery. The prize money is eligible for taxation. If the amount is more than Rs. 10,000, then a TDS of 30% will be charged. Therefore, the person receives the prize money after a deduction of 30%. The deducted amount is shown in Form 16a.

Understanding the difference between Form 16 and Form 16a

Specifications	Form 16	Form 16a
Description	When TDS is taken out of an employee’s pay, the employer gives the worker a certificate.	It is a certificate given by the person doing the tax withholding when tax is taken out of income other than a salary.
Eligibility	People with salaries and regular sources of income.	Self-employed individuals and other professionals.
Issuer	Employer	Deductors such as banks, etc.
Issued to	Salaried employees	Non-Salaried employees
How frequently is it issued?	Annually	Quarterly

Constituents/ components

Name, address, and PAN of the employee; TAN, PAN, and name of the employer

Employee’s PAN and TAN Tax detailsAmount of TDS paid.

In accordance with which law?

Section 203 of the Income Tax Act takes into account the TDS on chargeable or salaried income.

Section 203 of the Income Tax Act takes into account the TDS of non-salaried sources of income.

Relationship with Form 26AS

Only the TDS amount and related details of Form 16 are mentioned in Form 26AS.

All information mentioned in Form 16a is present in Form 26AS.

What are the recent changes in Form 16a?

The Central Board of Direct Taxes (CBDT) listed a few changes to the form. All information related to salary is much more detailed.

Things to remember

1. Form 16 will be issued to employees whose annual salary exceeds 2.5 lakh rupees.If they decide to change jobs, they are eligible to get a Form 16 from their employers.
2. When financial institutions deduct TDS, they will issue Form 16a.
3. Form 16 and Form 16a can be verified online through a portal.
4. These forms can help one calculate income tax return amounts and get refunds.
5. These forms also act as proof of income.
6. Check for discrepancies and errors. 

Conclusion

Filing taxes when one has access to the appropriate resources is always a good idea. Many forms are issued for various purposes. Form 16 and Form 16a make the calculation of taxes easier for individuals.

People who earn a regular income receive Form 16 from their employers when TDS is deducted from their salaries. People with other sources of income get Form 16a issued by financial institutions.

Both forms have certain similarities and differences. People must check all the information mentioned on the form. The issuing party should correct all errors.

If you have more doubts about Form 16 and Form 16a, visit Piramal Finance. This online platform is what you need to learn everything about relevant developments in the world of finance. For more information on financial matters or about personal loans, credit cards, and financial management, check out more blogs on their website!