Tax

Difference btw Form 16 and Form 16A

The financial year 2016-17 just passed by and it is time to get your financial, bank and other income and investment related documents in order. After all the last date of filing returns is July 31st and it will be here much faster than you realize. Tax filing can be an intimidating process for most of the tax payers. Right from basic doubts to big confusions, it can be a harrowing experience. However, we at letzbank will try to educate you on simple nuances and impart important knowledge as it comes to filing your returns in the coming weeks.

Process of filing Returns

You can file return online now and that makes it super convenient. But let us first look at the physical filing process. Go to Income Tax returns under forms/Downloads option on the main menu in www.incometaxindia.gov.in is the home page of Income Tax department. You will find a number of forms ranging from ITR1 to ITR7 in the resultant page with clear guidelines on applicability of each form. Just select the one which is applicable to you by clicking on the pdf symbol. Take printout of the resultant pdf form, fill it, sign it and submit at the nearest branch of the IT department.

Now let us move onto to the online filing of ITR. Just create a login on www.incometaxindiaefiling.gov.in and you will get various menu options like quick ITR, submit Returns, E-verify returns, view form no. 26AS etc on the left side of the web page. If you have to click on Quick ITR or submit returns and it will lead you to a login page. Create login by giving details like PAN Number, date of birth etc. With an OTP, you will be able to create your account. Select the form applicable to you by reading the guidelines on the form applicability. Fill in the form and for finding out TDS details, select form no. 26AS from the main menu and incorporate the tax deduction details in your ITR. Form no. 16 and 16A also give you details of income earned and tax deducted, we will discuss them in the ensuing section.

The process of filing return is not completed unless you verify and confirm the same with IT Department. Verification can be physically done by taking the printout of the ITR, signing it and sending it through speed post to Central processing centre of IT Department in Bangalore. Alternatively you can e-verify them through Net banking, Aadhaar OTP, EVC through DEMAT account, bank account based validation system, EVC through bank ATM and EVC through registered E-mail and mobile number. Now that we have touched upon the return filing process, let us proceed to understanding the difference between form no. 16 and 16A.

Difference between form no. 16 and 16A

Form number 16 is issued by an employer and acts like a certificate of salary paid or accrued and tax deducted thereon. If employee is eligible for additional deduction on account of HRA, home loan etc, the employee should give supporting documents to the employer so that the same can be adjusted in order to arrive at correct deduction and tax. This protects tax payer from claiming refund while filing return. The employer is required to deduct tax at source and issue form no. 16 in favour of every employee whose income exceeds the minimum exemption amount under Income Tax Act.

This form has gross income paid with clear mention of various allowances and deductions under chapter VI A. Further down it gives resultant tax figure and tax deducted at source. It is pertinent to mention here that the tax deducted figure in form no. 16 should match with the figure appearing in form no. 26AS online. This form also gives TAN, address and other important details of the employer that are needed to be furnished while filing return. If a tax payer has worked for more than one employer in the previous year then he will have multiple form no. 16s issued by each such employer.

Form no 16A is also a TDS certificate which is issued for tax deducted against every income other than salary (which is covered under form no. 16 as explained above). Following instances are covered by section 16 A, the list is indicative and not exhaustive:

  • Interest earned on bank account
  • Rent Receipts
  • TDS deducted on Insurance commission
  • Any TDS deducted from any income earned by you as freelancer

Just like Form no. 16, this form also mentions details of name and address of deductor and deductee, PAN and TAN details, and amount of TDS deducted and deposited. The total income on which TDS is deducted is also specified in the form. Form no. 16A are usually multiple as they are issued by each source of Income unless you have only one Fixed deposit and no other source of income other than this.

Even though income tax has been deducted, the assessee has to file an Income Tax return because there are various other incomes or deductions that might not have been taken care of in these forms. For example, bank always deducts 10% as tax on the interest earned over Rs. 10,000 in a financial year. But the tax payer might be in a higher tax bracket of 20 or 30% in which case, the additional tax will have to be paid as self assessment tax while preparing the return. Also return consolidates all incomes as well as deductions from various sources of income in a financial year.

Visit us on Letzbank and take a look at the very convenient and easy to understand tax filing platform by clear tax. It guides the tax payer through each step and also highlights the mistakes if any made during filling the information. So this year don’t be hassled be clear with clear tax!