Understanding Form 16A and 16B for tax return filing

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A report stated that the Indian government has extended the deadline for filing ITR for AY 2020-21 to 31st December. As dates are nearing, the employers need to file the tax promptly and accordingly issue the Tax Deduction Certificate, also known as Form 16A and 16B for tax to their employees.

Form 16 serves as a proof that tax was deducted and the concerned employer has deposited the deducted amount to the Income Tax Department of India. However, merely understanding Form 16 won’t be sufficient when understanding its role in tax return filing as it comes with detailed subsections.

Many individuals often confuse between Form 16A and 16B due to their almost similar purposes. A taxpayer must thus understand the fundamental differences between Form 16A and Form 16B, which are a part of Form 16, to avoid any confusions and file their income tax returns in time.

What is the purpose of Form 16?

Form 16 is a certificate that comprises information used to file Income Tax Returns. As per Section 203 of the Income Tax Act, 1961, every employer has to issue this certificate to their employees. Usually, Form 16 consists of details related to the salary paid in a fiscal year and the TDS amount deducted from the salary of a concerned employee.

It is essential to note here that this form is only issued when an employee’s annual income exceeds the tax exemption threshold. It is vital to know that the TDS certificate issued can also serve as an essential income document when availing financing facilities like a credit card.

Therefore, a taxpayer must know the difference between Form 16A and Form 16B to pay taxes timely and file return for the same accurately.

What is Form 16A ?

Part A of the form gives a detailed look at the amount of tax deducted by an employer from an employee’s salary income in a given financial year. The components of Form 16A include –

Personal details – This section contains the information of an employer and the employee. Information like PAN along with TAN (Tax Deduction & Collection Account Number) of the employer is displayed in this form.

Salary information – This section includes a summary of an employee’s salary details.

Assessment Year – AY or Assessment Year details on the year for which an employee is to file tax returns.

Deduction date – This section shows all the dates in a year when TDS was charged from one’s salary by an employer.

Date of deposit – The date of TDS collection by an employer and submission to the Income Tax department is mentioned in this section.

Acknowledgement number – This unique number indicates that the department has received the deducted tax.

Apart from these details, the certificate also contains the time of issuing Form 16 between employee and employer. Form 16 doesn’t concern employees alone, and a business owner can  also fairly use the certificate during income tax filing to record income from other sources and tax paid. Further, they can also use the Form to avail fianncial tools like credit cards. When utilising such cards, they must aso ensure to use the credit card wisely to ensure efficient management of finances alongside making tax payments.

What is Form 16B?

Form 16 B is the second section of the form, which includes details like the salary paid, taxes paid, and due amount, alongside the details on employee’s additional income, if any.

Some of the components of Form 16B are-

  • Detailed salary breakdown.
  • Total Income.
  • Salary after tax.
  • Exemptions.
  • Deductions.
  • Total tax paid on income.
  • Income tax due.
  • TDS deduction.

Apart from understanding the differences between Form 16A and Form 16B, a taxpayer irrespective of his/her role in a business, must know how to use it during tax filing. It will help an individual to accurately file the annual returns.

How does Form 16 A and Form 16 B streamline the availability of credit instruments?

Business owners can benefit significantly from financing instruments like credit cards by handling operational expenses efficiently. It is the same for salaried individuals as well, who need to avail a credit card to pay for regular spending needs.

The two forms can, nevertheless, serve as a valuable income proof to establish an applicant ‘s credibility when applying for financing tools like credit cards as thy contain detailed income information.

Further, they can also use these cards to make tax payments as and when assessed. Nevertheless, to get the most out of credit cards, they should choose their transactions wisely.

For instance, cards like the Bajaj Finserv RBL Bank Super Card can help earn accelerated reward points on several transactions made online and offline at partner stores. Such reward points can be redeemed to avail various benefits. You must thus also know the things you can do with your credit card reward points earned.

Issuer of the card also provides pre-approved offers on their several financial products like personal loans, business loans, etc. and make ginancing hassle-free. You can check your pre-approved offer by entering your name and phone number only.

As for Form 16, understanding these key differences between Form 16A and 16B can help simplify documentation during income tax return filing. If you are a taxpayer, make sure to obtain the form from your employer to streamline the procedure of annual tax filing.

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Understanding Form 16A and 16B for tax return filing

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