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Learn what is form 16, how to file ITR using it, & the key differences between Form 16A and 16B for taxpayers in India. Read the complete guide.
Form 16 ! You might have heard about it if you are a corporate employee. It is mostly used while filing income tax returns. If you are new to this term or are not confident about what it is or how it works. Don’t worry! There is no rocket science. In general terms, it is nothing but a simple document provided by the employer to an employee. Now the next question that you might come across is what it includes.
Let me make it easy for you to understand. It has details of the salary earned during a particular year and tax deducted at source on the same, which is TDS. With this, you can get what your taxable income is and can file your income tax return accordingly.
Simple! Right? Not exactly. There are a few other tax-related certificates that you must be aware of. It includes Form 16A and Form 16B. Each of these documents serves different purposes and is included in different types of income or transactions. In this guide, we will learn what Form 16 is , how to file ITR using Form 16, what is Form 16A, what is Form 16B, and the key differences between them.
Let’s make it very simple for you. Form 16 is nothing but a TDS certificate that an employer issues to an employee for tax deducted from the salary during a financial year. It includes a summary of your salary earned, applicable deductions or exemptions, and the TDS that gets deducted and deposited by your employer.
You can consider it as proof provided by your employer for deducting tax on your salary. It aids you in verifying your salary and tax details while filing income tax returns. For example: If your employer deducts Rs 40,000 from your salary as TDS in a financial year, you will find the relevant details of your salary and TDS deducted on your Form 16.
Form 16 simply includes details such as:
You will generally find Form 16 in two parts: Part A and Part B, where each of it includes different information.
Part A has information related to the TDS deducted and deposited by an employer. It includes the employee’s and employer’s tax details, period of employment, and the amount of TDS deducted.
Whereas Part B gives a detailed breakdown of salary income and the calculations that have been used to decide taxable income. It further includes salary, allowances, exemptions, deductions, and resulting tax liability.
All this together gives employees a consolidated view of their salary and TDS details for the financial year.
Form 16 is generally issued by the employer on deducting tax from the employee’s salary. For salary TDS, employers must issue Form 16 by 15th of June following the financial year.
If you have worked for more than one employer in the same financial year, then you might receive it from multiple employers. In that case, you have to consider the salary and TDS details from all relevant employers while filing ITR. This is why it is important, as it brings important salary and TDS information together at one place for salaried employees.
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Form 16 mostly does most of the work required for an income tax return for salaried employees. But it’s not enough alone. You must also keep an eye on Form 26AS, AIS, and other income details that you have earned during the financial year.
Below, we have mentioned a step-by-step process to file ITR using Form 16:
Get form 16 from your employer or organization and do check that all the details are on point like name, PAN, salary details, and TDS amount are entered correctly.
If you have worked for different employers in a year, collect Form 16 from every employer.
Do check the TDS mentioned in your Form 16 with the information available in Form 26AS. You can also take a look at the Annual Information Statement for other income and tax-related information that has been reported to the income tax department.
In case you find that the information is mismatched, have a word with your employer or the relevant deductor before filing a return.
Select the form that applies to your income bracket. Your applicable ITR form might depend on factors like salary, other income sources , capital gains, business or professional income, and other conditions.
Make use of form 16 to verify your salary details while preparing your ITR.
It includes:
Make sure the figures you mention are consistent with your Form 16 and other tax details.
Form 16 primarily covers your salary income. If you have earned income from other sources, you need to report it separately.
For example, you may have:
Do not assume that an income can be excluded simply because it does not appear in your Form 16.
Form 16 generally includes your salary income. If you have acquired income from other sources, you must update that too.
For example: you might earn:
If deductions are applicable to you as per the regime, then do mention the required details while filing ITR. The deductions that are applicable to you might differ as per the tax regime and different circumstances.
Once you have entered your income, deductions and TDS details, review the final tax amount.
If the tax that has been deducted is greater than your final tax liability, then a refund might be applicable to you. If additional tax is payable, then you must pay for the amount that is applicable before you complete the return.
Once you have reviewed all the information, submit your ITR through the income tax e-filing portal and complete the verification process.
Please keep a note that Form 16 for ITR is a supporting document for the ITR itself. Some people misunderstand form 16 with ITR.
Before you submit your return, make sure you have:
Using Form 16 along with these documents can help you report your income and TDS information more accurately.
Form 16A is generally issued quarterly for applicable non-salary payments.
Form 16A is a TDS certificate issued for the tax that has been deducted from income other than salary. It is provided by the organization or person that is responsible for deducting the tax to the person from whose income it has been deducted. For example, if a bank deducts TDS on applicable interest income earned from a fixed deposit, the bank might issue Form 16A to the account holder. Similarly, it could be applicable to other payments where TDS is deducted under certain specific provisions.
It generally includes :
Form 16B is a TDS certificate that a seller issues for tax deductions made on certain immovable property transactions.
In short, when a buyer opts for immovable property from a resident seller, TDS is applicable to it as per Section 194-IA. As a result, the buyer deducts TDS from the payment made to the seller and deposits it with the government.
As soon as the TDS is deposited, the buyer can download Form 16B and provide it to the seller as proof of the TDS that has been deducted on the property transaction.
For example, if you purchase an applicable property from a resident seller and deduct TDS from the amount payable to the seller, you will give the seller Form 16B as the TDS certificate for that transaction.
Form 16B includes details related to the property transaction and the TDS deducted, such as:
One differentiating factor between Form 16A and Form 16B is that Form 16A is applicable to different non-salary income,, while Form 16B is associated with applicable TDS on the purchase of immovable property.
Although both Form 16A and Form 16B are TDS certificates, they serve different purposes.
| Basis | Form 16A | Form 16B |
|---|---|---|
| Purpose | Certificate for TDS deducted from applicable income other than salary | Certificate for TDS deducted on applicable immovable-property transactions |
| Common use | Interest, commission, professional payments and other applicable non-salary payments | Purchase of applicable immovable property |
| Relevant provision | Depends on the nature of the payment | Section 194-IA |
| Issued to | Person receiving the applicable non-salary payment | Seller of the property |
| Issued by | Deductor of the payment | Buyer of the property |
| Frequency | Generally quarterly | Transaction-specific |
| Main focus | TDS on non-salary income | TDS on property purchase |
That’s all for this blog. Here we saw what Form 16 is, what Form 16A and Form 16B are, their differences, and how to file an ITR using Form 16. Understanding what Form 16 is and how it is used is very important today, as it eases the tax-filing process for salaried employees. Form 16 provides important details about your salary and TDS deducted by your employer, which can be used to create or review your ITR.
It is also important to understand the difference between Form 16, Form 16A, and Form 16B. While Form 16 is related to salary income, Form 16A covers applicable TDS on income other than salary, and Form 16B is specifically related to TDS on applicable immovable-property transactions.
Before filing your ITR, always make a habit of cross-checking the information in your tax documents, including Form 16, Form 26AS, and AIS. When you maintain these records and TDS correctly, discrepancies are avoided, and your ITR is accurate.
If you are looking for a payroll software that can help you ease this process, then we have got you covered. Super Payroll by Superworks covers this, plus it also provides additional features like a dashboard, bonuses and deductions, different tax forms, salary templates, and reports, which give you an overview of your money stuff. Give it a try and see how it works in your favour.
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