What Best Differentiate Income Tax Form 16 & Form 16A

While you have to pay your taxes and file Income Tax returns for the same annually, there is another form of tax that you do not pay directly. Instead, the deduction occurs at the source of income generation. Such taxes are known as TDS or Tax Deducted at Source. For this purpose, income tax form 16 and form 16A gain paramount importance.

These forms stand as a certificate of TDS deduction when filing your Income Tax Return. While these two forms are similar, there are also many points of difference between form 16 vs form 16A. Take a look at what these two forms are and the objective they serve to understand their difference.

Know what form 16 is and why it is required

Income Tax Form 16

Form 16 is a TDS certificate towards your salary income irrespective of the use it is put – credit card bill payment, product purchase, etc. If your salary income crosses the basic exemption limit of Rs. 2.5 Lakh, your employer is required to deduct tax at source on the salary income. Consequently, your employer issues Form 16 to you.

A working individual often carries questions like why form 16 is required. So, form 16 serves as an acknowledgement that tax has been deducted by your employer from salary income and deposited with the Department of Income Tax. When filing your I-T Return, you may provide this form, whereby the TDS amount is adjusted with the tax payable.

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Know what form 16A is and why it is required

Similar to form 16, form 16A is a TDS certificate. However, the source it is issued from and the income it is calculated on differ. It is where the primary difference between form 16 vs form 16A lies.

You require the form when tax is deducted on income other than salary. Applicable income may include interest earned on investment schemes, lottery income, commissions, rent, and such other earnings that do not fall under the purview of salary generated from income.

It is issued by the authority deducting this income and serves a similar purpose as to why form 16 is required, i.e., serving as a TDS certificate. Along with the TDS certificate and tax payment in time, you may conveniently acquire additional financing as loans and credit cards. However, make sure to know all the important things before applying for a credit card to improve the chances of approval.

Difference between Income Tax form 16 vs form 16A | An overlook

The primary points of difference between the two types are explained below

Use: Income tax form 16 is used for TDS when income falls under ‘Salary’ while form 16A is used when the earning comes under ‘income other than salary.’

Eligibility: An individual earning a salary as income is eligible to use the former while self-employed and professional individuals with other income are eligible for the latter.

Applicability: Applicability of form 16 lies only for salary income while that of form 16A covers various earnings listed under ‘other income.’

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Details required: In income tax form 16, the details an individual is required to fulfil include income proof, TDS details, employee’s PAN, employer’s PAN & TAN, acknowledgement of tax payment, surcharges and education cess. When filling up form 16A, you would require employer’s PAN and TAN, assessee’s PAN, details of TDS amount paid and TDS receipt number.

With this difference between income tax form 16 and form 16A, you may proceed to acquire the required form for TDS deducted on different incomes. Provide the same during Income Tax Return filing for TDS settlement and claim refund, if any.

Timely return filing along with TDS also helps in securing additional finances as lenders consider you a credible individual responsible with his/her finances. You may, therefore, avail loans and advances from top lenders along with attractive features and benefits.

NBFCs like Bajaj Finserv offer these loans at competitive interest rates to credible borrowers as well as other financial products such as credit cards like Bajaj Finserv RBL Bank SuperCard.

As a credit card user, make sure to always meet the total outstanding amount as mentioned in your statement. Use your credit card wisely to improve your credit score and benefit from better terms on future financial products and services available.

What Best Differentiate Income Tax Form 16 & Form 16A 1

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What Best Differentiate Income Tax Form 16 & Form 16A 2
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