Types of Form 16

Form 16 is a certificate that provides details on income tax deducted at source (TDS) from a salaried employee and passed on to government authorities. It is issued by an employer to an employee each year, inevitably simplifying the process of filing Income Tax Returns (ITR).

 

Form 16 also serves as proof that your employer has deposited the TDS amount with the government. This, in turn, helps the government avoid fraud. Any salaried individual who earns over the minimum threshold of ₹2.5 lakh is eligible for Form 16. Banks and other financial institutes view Form 16 as proof of income and the document can be used to avail a higher limit on a credit card, approve home/car loans, etc.

There are three different kinds of Form 16 — Form 16, Form 16A and Form 16B — each of which are certificates of tax deducted at income source. Form 16 has two components — Part A and Part B. However, you must not confuse Form 16 Part A and B with Form 16A and Form 16B.

• Form 16

Part A of Form 16 includes the name, address, PAN, and TAN of the employer as well as the name and address of the employee. This part also details the period of employment and the value of income tax that has been deducted.

Additionally, Form 16 Part B contains the detailed salary break-up. It also lists the deductions that are allowed under the income tax regulations. It is important for an employee to cross-check that all details mentioned in both parts of Form 16 are accurate.

• Form 16A

Form 16A categorically specifies TDS on interest earned on fixed deposits, mutual funds, insurance commission, etc. The name/address of the employee/employer is also included here. The PAN and TAN details of a deductor are mentioned too.

• Form 16B

Form 16B verifies the quantum of tax deducted at source while making any property purchase above ₹50 lakh. The TDS amount listed on Form 16B is given by the buyer to the Income Tax department. This is basically a TDS certificate for all tax deducted at source on an immovable property sale. While many people believe that Form 16B is for salary, that is incorrect.

Form 16, Form 16A, and Form 16B are crucial documents that employees require while filing their ITR. However, there are still many contrasting details in the various forms. Here, we look at the differences between Form 16, Form 16A, and Form 16B: