Introduction

Under Section 203 of the Income Tax Act, 1961 mandates that the employer has to deduct TDS. After deducting the TDS, the employer has to issue certificates. These certificates are Form 16 and Form 16A that are issued to the deductees as a proof of the same.

Tax Deducted at Source (TDS) is a type of tax deducted from the income as per the specified percentage (%).TDS is deducted by the employer.

Example,

Karan works in M/s. ABC Ltd, with a salary of Rs. 50,000. The company pays Rs. 45,000 to Karan and deducts Rs. 5,000 as TDS (on the basis of TDS % applied on his income).

Now, M/s. ABC Ltd. will deposit Rs. 5,000 as TDS to the Government in the name of Karan. The company will also provide a TDS certificate to Karan, certifying that Rs. 5000 TDS is deducted from Karan salary (for FY 2015-16).  This TDS certificate can be downloaded by M/s ABC Ltd. from TRACES (website of Govt.). M/s ABC will issue Form 16 as TDS certificate to Karan.

Important points

  • TDS Certificates should be downloaded only from the TRACES (TDS Reconciliation Analysis and Correction Enabling System of the income tax department).The downloaded certificates are in specific format.
  • The digital signature should be verified, it must have a check mark cross. An unverified signature will have a question mark over the signature.
  • Must check the details on the TDS certificate, it should have correct details of your name, PAN, deductors’ TAN, amount paid to you, TDS amount.

Types of TDS certificates

  • Form 16: for salary income (issued annually)
  • Form 16A: for non-salary income (issued quarterly)

The basic difference between Form 16 and Form 16A is that the TDS deducted on salary is reflected in Form 16 and TDS deducted on other payments is reflected in Form 16A.

Form 16

Form 16 is the TDS certificate issued by the employer (for salary income) and deducting the tax while making payment to the employee. Details of the form are submitted on Form 24Q.This form has 2 parts i.e. Part A and Part B.

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Form 16 Part A

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Form 16 Part B

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Due Date of Form 16

Employers have to furnish Form 16 to their employees for FY 2016-17 by 15th June 2017 (the extended date).

Penalty for Form 16

If the employer fails to furnish the Form 16 within the due date, the company is liable to pay a penalty of ₹100 per day till the form is issued. However, the penalty will not exceed the amount of tax deductible. Details submitted to Form 26Q and 27Q.

Form 16A

Form 16A is a TDS Certificate which certifies the TDS amount deducted and deposited on all other payments except salary (non-salary income).

Components of Form 16A

It contains the following particulars:

  • Name, PAN, and TAN of the deductor
  • Name, PAN of the deductee
  • Nature of Payment, Amount Paid and the date of payment
  • Receipt no. of the TDS payment
  • The above details as mentioned in Form 16A are required to be furnished at the time of filing of returns

Due Date of Form 16A

Form 16A should be issued within 15 days from the due date for furnishing the statement of TDS.

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All details that are there in Form 16A are available on Form 26AS then why TDS certificate? Comment

TDS certificates and Form 26AS are a cross check for each other in case of any mismatch. Without TDS certificate, no relevant mismatch can be done.

The main purpose of introducing Form 26AS is so that a taxpayer is able to cross check the details mentioned in their TDS certificates to create transparency.

In case, your return is picked up for the Scrutiny Assessment then you are likely to show the TDS certificate to the IT department. Also, if TDS is not reflecting in the Form 26AS then you need to show the TDS certificate as a proof of deduction.

In case of salaried persons, Form 26AS is not sufficient to file the return as it does not show

  1. The breakup of the income earned.
  2. The details claimed under section 80C to section 80U which is available in Form 16-Part B.

In case you are confused about TDS Return Filing as a deductor, feel free to consult the experts at LegalRaasta. You can get comprehensive assistance with our TDS Return Filing Software which supports TDS on Salary payments (Form 24Q), Rent, Interest, Commission and other Non-salary transactions (Form 26Q), NRI (Form 27Q)and TCS (Form 27EQ).