Understand your TDS Certificate - Form 16-16A

Form 16 changes 2019

  • The type and amount of allowances such as HRA u/s10(5), LTA u/s 10(13A), etc which have been claimed to be exempt must now be reported separately in Form 16.
  • Standard deduction as announced during Budget 2018
  • In Form 24Q, the employer will have to provide the bifurcation of the salary – gross salary, the value of perquisites and profits instead of salary, exempt allowance, and deductions claimed by the employee.
  • Previous employer income as reported to the current employer
  • Any other income as reported to the employer other than salaries
  • Tax on employment PT (as applicable)
  • Savings and investments as declared by the employee

What is TDS Certificate?

Under Section 203 of the Income Tax Act, 1961 it is mandatory for all deductors/employers to deduct TDS from any income before payment. After deducting the TDS, the deductor has to issue relevant certificates for such deductions. This certificate is called as TDS Certificate.

When TDS is deducted, it is important to issue TDS certificate. This helps the payee knows how much tax is paid by them. It shows the particulars of payment, the date of tax deducted at source and the date of its credit to the Government.

Important points

  • TDS certificate should be generated only from TRACES.
  • The deductee should verify the digital signature certificate.
  • Must check the details on the TDS certificate. It should have correct details of name, PAN, deductors’ TAN, the amount paid, TDS amount etc.

The deductee should produce the details of this certificate, during the regular assessment of Income Tax. This is important to adjust the amount of TDS against the Tax payable by the Deductee.

Many deductors do not issue TDS certificate unless it is requested for. Therefore, it’s important to ask for the TDS certificate. By this, the deductee will know the exact amount of tax paid and deposited with the government.

Types of TDS certificates:

There are two types of TDS Certificates;

  • Annual TDS Certificate – Form 16, given to employees
  • Quarter TDS Certificate – Form 16A given to vendor/deductees

Form 16:

If tax has been deducted at source from the salary paid to you, your employer will certify the details of tax deducted at source (TDS) & deposited by them in Form 16. Form 16 is the Salary TDS Certificate.

If your total income is Rs 2,50,000 or less, the employer does not have to deduct TDS and therefore, a Form 16 may not be issued to you by the employer. If you have worked with more than one employer during the year, you will have more than one Form 16.

Components of Form 16:

Form 16 consists of 2 parts, PART A and PART B:

PART A PART B
Consists of:

  • Name and address of the employer and the employee
  • TAN and PAN details of the employer
  • PAN of the Employee
  • Employees period of employment
  • Details of Tax Deducted and paid to the government
Consists of:

  • Detailed breakup of the salary paid by the employer
  • Exemptions and deductions allowed as per IT Act
  • Relief (if any)
  • Tax Computed, Deducted and paid details
Part A and Part B both are requested, downloaded and generated from the TRACES portal. This certificate will contain a unique Certificate number.

Form 16A:

Like Form 16, Form 16A is also a TDS Certificate. Form 16 is for salary income, whereas Form 16A is applicable for TDS on Income Other than Salary.

Banks issue a Form 16A when TDS is deducted by them on interest earned by you in fixed deposits. If you are a freelancer, your clients will issue you form 16A if they have made TDS deductions from payments they make to you.

Components of Form 16A:

Form 16A contains the following details:

  • Name, PAN, and TAN of the Deductor
  • Name, PAN of the deductee
  • Nature of Payment, Amount Paid and the date of payment
  • Quarter of deduction, Receipt no. of the TDS return, Amount deducted and deposited
  • Challan Deposited details (Challan Amount, CIN and Status)
  • Signature of Authorized person