The tax-filing season will soon be upon us. With the recent changes and all the income tax jargons, tax filing seems confusing. We are acquainted with Form 16 as a commonly expressed tax document, whereas form 16A is a bit different. Both of them are TDS certificates. TDS or tax deducted at source, is the payment a company, institution or a person is required to make to the government at a certain rate if it exceeds the given slab limit. For example, when interest earned on fixed deposits exceeds Rs 40,000 (in a year), the bank will deduct 10% tax on the maturity proceeds before crediting it to the customer.
Form 16 gives a breakup of the taxes paid by your employer based on the income you made as part of your salary. If your income exceeds the exemptible limit, employers have the right to deposit taxes on your income to the government. If your salary is within the taxable limits of the income tax law for the year, the employer may not issue Form 16. This certificate has two parts, namely Part A and Part B.
Part A carries the details of the employee and the employer. It includes name, address, PAN, TAN, employment period and the amount deducted as TDS on the employee’s behalf.
Part B holds the breakup of salary paid, deductions allowed etc. that helps you with the ITR filing.
Form 16 has been simplified for the FY’19 to make it easier for e-filing ITR. These forms in the new format will be made available to you by your employer before the end of June. If you had changed jobs in the financial year, you will receive separate Form 16s from each employer.
Any income you earn besides the salary during the financial year has to be filled up in Form 16A. For example, Form 16A can be issued by the bank for income earned from interest on your deposits made.
If you are a freelancer who earns income from client payments, your client will issue a Form 16A if TDS was deducted on your payment.
This can be issued by any institution that is allowed to deduct and deposit taxes on your income on your behalf. It is deducted on any income that is taxable, or any proceeds on maturity of a scheme.
Form 16A will include name and address of the deductor and the deductee, the PAN, TAN and details on the challan of the TDS deposited. Further it will include the details on the income you earned and the TDS deposited on such income.
If you want to find out all the information of the TDS on all the income earned on your PAN, you can refer to Form 26AS to check if all the said tax deduction was deposited with the government.
You have the option to view this from the official website of the income tax department. You can log in to your account and find it under the “view tax credit statement” option in “my account” tab. Remember that there are separate Form 26AS for each financial year. In case of any wrong tax deduction or abnormality, you can contact the respective institution or the tax authority.
Now the question arises that should one file the Income tax returns as the tax has already been deducted and paid on your behalf? The answer is ‘Yes you should’.
While your employer or bank may have deducted the tax on your behalf according to the applicability of the Income Tax Act, but their knowledge of your income is limited to that transaction or salary from their source only. You may have other income resources or you many have other losses that you can write off against the earnings made.
You will be able to claim any refunds on tax already paid (if applicable) only if you file your returns. Moreover, you are required by law to file your ITR if your income for the year exceeds the taxable slab limit.