Understand Form 16, Form 16A And Form 16B Before Filing Tax Return

That time of the year has come again and it is time to file your IT returns. Many first time tax payers get confused with the various aspects of...

That time of the year has come again and it is time to file your IT returns. Many first time tax payers get confused with the various aspects of filing returns. Among all of them one of the most common areas of mistakes is to get confused with the difference between Form 16, 16A and 16B. Form 16, Form 16A and Form 16B are certificates of TDS or Tax Deducted at Source on income, from different sources. Their purposes are different, as are their eligibility and their application.

What is Form 16?

Form 16 is the TDS certificate for ones salary. This is the most common financial document of all working employees and this is the most important for the Income Tax Returns for TDS. It is a certificate of TDS deducted from the salary and that which has been duly deposited with the Government exchequer.

Employees who draw a salary of less than Rs 2.5 lakhs in a financial year are exempted from Income Tax and do not get Form 16. In case an individual is working for more than one employer and tends to switch jobs in a financial year, then he or she would be getting separate Form 16 from each of the employers, providing the salary of the employer is more than the 2.5 lakhs mark.

Understanding Form 16A and Form 16B

Form 16A is the TDS certificate for income other than salary. These kinds of incomes include other sources of income generation like investments in Fixed Deposits, mutual funds, gold bonds and other capital gains.

Finance Company has options for providing loans against FDs and if you want any kind of loan like personal loan, home loan or business loan, contact Bajaj Finserv to check your pre- approved offer today. Some of these do fall under IT Act slabs at a rate specified by the government from time to time. Moreover, banks often deduct Tax at Source if the income is more than the specified amount and falls under tax slabs and so they have to offer a TDS certificate of Form 16A. Difference between Form 16 and 16A is between the nature of the sources of income.

Here are some other questions and their respective answers:

What is the Salary Limit for Form 16?

Rs 2.5 lakhs per annum

Is it mandatory to issue Form 16 to all employees?

Only whose salary exceeds Rs 2.35 lakhs per amnnum

How can I download Form 16a?

From the Income Tax website

Anyone who pays a monthly rent of Rs 50, 000 or more for building or paying for land is required to deduct TDS and thereby deposit the tax with a Central bank Account. The tenant would then have to issue Form 16A to the owner of the property. Anyone who is earning a commission for the sale of insurance products too is liable for TDS by his employer and then the latter would have to issue a TDS Form 16A to the agent.

Form 16B is the TDS certificate for sale of property. It certifies that TDS has been deducted on the income earned from the sale of property, be it a building, a part of it or a plot of land- other than agricultural land- and the TDS has been deposited by the property buyer with the IT department.

According to the rules laid down by the Indian Government, the person who buys property from a resident transferor needs to deduct TDS on any money or consideration paid. The TDS is to be deducted from all immovable assets purchase in India.

While the employers and the financial institutions require a TAN before they can collect or deduct TDS, this is a not a requirement for tenants and property buyers. They only need to provide their PAN details while depositing the TDS with the government.

When it comes to filing returns, it is also quite easy to confuse between these three types of forms. All the forms have various parts that require filling in different kinds of information and this should be done with caution so as not o give rise to any issues while filing the returns.


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Aditi Ahuja is a noted Financial Consultant and Adviser. As she has been worked with many financial firm for several years, she has extensive knowledge in this field. She writes on Financial affairs, issues and solutions covering a broad range of topics like loans, insurance, investment and funding. Aditi loves to write and travel in her free time.
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