Purpose and Significance of Form 16A

How tedious is it to go through every step of a government or legal procedure? Quite a lot, right? But, the procedure gets so much easier when you find it little by little down the lane.

Here – we are going to be talking about Form 16A. Form 16A – it is a Tax Deducted at Source Certificate that shows the amount of TDS, the nature of the payments, and the TDS payments submitted to the IT Department. Form 16-A demonstrates value in non-salaried compensation. TDS professional fee, bank interest, and rental payment

What is Form 16A and How to Get It?

Form 16A is essentially a certificate that every company and organization is required to keep on file for their personnel. It is a Tax Deducted at Source (TDS) certificate that lists all of the taxpayer’s or individual’s sources of income.

Form 16A is known as a Tax Deducted at Source certificate that is included with Form 16. Form 16 is only for salary income; Form 16A is for TDS on income other than salary. Form 16A will be provided when TDS is deducted on fixed deposits, insurance commissions, rent revenues, or any other income on which TDS is deducted.

This document is typically issued by your Deductor for the current fiscal year and will show the entire earnings and total income taxes deducted for that fiscal year from sources other than your salary. You can obtain Form 16A by downloading it from the Income Tax Department’s website. The Form is open and available on their website in both PDF and fillable formats.

Form 16A – Explained

For the purposes of the Money Tax Act, any person can generate income from two sources: “salary” and “other than salary.” Form 16A is a TDS certificate that is provided when tax is deducted from income that is not salary.

Let us illustrate the preceding with an example. Assume Amit has an Rs. 1 lakh fixed deposit with Union Bank of India. Amit’s investment will receive interest throughout the year. In this situation, the bank will deduct 10% tax and send Amit Form 16A on a quarterly basis. Form 16A is also issued when TDS is deducted from rent, insurance commission, and so forth.

Form 16A includes information such as the name and address of the Deductor and deductee, PAN, TAN, and challan details of the tax deposited, as well as the total income earned and tax deducted. All of the information on Form 16A is also available on Form 26AS.

Both Form 16 and Form 16A is required to file the income tax return smoothly. While the details of the former are not totally available in Form 26AS, the details of the latter are.

How Does Form 16A Look?

Form 16 A’s components and particulars are as follows:

• Name, PAN, and TAN of the Deductor – this can be the bank where your TDS is deducted at source, insurance companies where TDS is applicable, or any other person/place where you get income and TDS is applicable.
• Name and PAN of the deductee – These are the data of the person getting TDS benefits.
• Date of payment, amount of payment, and mode of payment
• The TDS payments’ receipt number.

All of these facts must be included in Form 16A when submitting income tax returns. Form 16A is a TDS Certificate that contains all TDS amounts that have been deposited with the Income Tax Department. When payments from non-salary income are sent to the IT Department, the Deductor, such as TDS Professional fees, Rent, and Bank Interest, issues a “TDS Certificate.”

Why Do You Need Form 16A?

When you file your annual income tax returns with the IRS and have income from sources other than your pay that has tax deducted at source (TDS), Form 16A is necessary. When you apply for a loan of any kind, such as a house loan, consumer loan, auto loan, or personal loan, most banks and financial institutions, use this document as part of their verification procedure.

Now that you have your Form in hand, don’t you want to know how to fill it out?

How to Fill Form 16A?

The following points must be followed when filling out Form 16A:

1. Fill in the Deductor’s name and address, making sure to include their PIN number (Postal Index Number) as well.
2. Fill in the Deductor’s TAN (this is an alphanumeric number with the first four digits in the alphabet and five digits, and 1 in the alphabet).
3. You will also need to enter the Deductor’s PAN (an alphanumeric number with the first four digits in the alphabet, five digits, and one in the alphabet).
4. Enter the data for four acknowledgment numbers.
5. The Form of remuneration is next, whether contractual, professional or otherwise.
6. Enter the corresponding codes for all payments listed.
7. The name of the deductee whose TDS was deducted.
8. Mention the PAN number of the deductee whose Tax Deducted at Source has been deducted in the column that says PAN no. of the deductee.
9. In the Form, enter the period, which will be the fiscal year. For example, the fiscal year will run from 1 April 2019 to 31 March 2020.
10. After you’ve completed all of these fields, you’ll need to enter the TDS deduction information.
11. The TDS amount is stated in words.

Conclusion

When you file your annual income tax returns with the IRS, and you have income from sources other than your pay that has tax deducted at source (TDS), Form 16A is necessary. Hoping this post can walk you through what Form 16A actually is. Make sure, as an employee, you make use of it in the best possible way.