In simple words, Form 16 is the document proof given by an employer to all its employees with the complete details of income (salary) , the amount deducted as income tax (TDS) for each month and the total tax payment. This document will be used by employee to submit the income tax returns to the government. He need not submit the form 16, it is only proof for his income and the tax payment. It is safe to keep all your form 16, if there is any issue in the income tax returns, form 16 has to be used as the proof. Note that, issuing form 16 is applicable only for the salaried employees. Normally, form 16 would issued after the current financial year.
The following are the important points to know about the form 16.
Form 16 contains the details of income and the tax deducted.
It is not compulsory to give the form 16 to the employees if there is no TDS deducted.
If the company don’t have the TAN, they can not deduct the TDS. In that case, they will not provide the form 16.
It is employers responsibility to issue form 16 if they have deducted tax on your salary.
Form 16 may be used for applying the home loans. Some of the banks ask for the form 16 as the income proof.
Form 16A is different from form 16. Form 16a is issued for the TDS other than salary income.
If the information in the form 16 is wrong, you can correct it.
It is not compulsory that everyone need form 16, if you are self employed then there is no way for you to get the form 16. In that case, it is very important for you to submit the income tax returns and show that as proof for your income.
If you are working in an consultancy and not getting the tax deducted by them, you would not get the form 16 too. Don’t need to try getting it, because you can get form 16 only when the tax deducted from your salary.
The purpose of the Form 16 and 16A is the same except the issuing person. Form 16 is applicable only to the salaried employee. There is many other areas where TDS can be applicable like deducing the tax for interest earned by your Fixed Deposit in the Bank. Here bank is the person who deducts the tax. For every financial year they must issue a TDS certificate to the customer. They have to fill the Form 16A and hand over to the customer.
Example for Form 16A:
Form 16A is provided by any other institutions deducted the tax in the form of TDS has to issue Form 16A. For example, you are working as an agent for a bank, they provide you the commissions for the sales. In that case they will deduct the tax and give you the money. At the end of year, they will give you Form 16A with the details of tax deducted on your commissions. This form will be used same like Form 16 to submit your IT returns.
Form 16A is issued in the following cases:
For interest on securities; dividends;
interest other than interest on securities;
winnings from lottery or crossword puzzle;
winnings from horse race;
payments to contractors and sub- contractors;
insurance commission;payments to non-resident sportsmen/sports associations;
payments in respect of deposits under National Savings Scheme;
payments on account of repurchase of units by Mutual Fund or Unit Trust of
commission, remuneration or prize on sale of lottery tickets;
fees for professional or technical services;
income of foreign companies referred to in section 196A(2);
income from units referred to in section 196B;
income from foreign currency bonds or shares of an Indian company referred to in section 196C;
income of Foreign Institutional Investors from securities referred to in section 196D