Types of Form 16 and Their Differences

Form 16 serves as proof that your employer has deposited the TDS amount with the government. This, in turn, helps the government avoid fraud. Any salaried individual who earns over the minimum threshold of ₹2.5 Lakhs is eligible for Form 16. 

Banks and other financial institutions view Form 16 as proof of income. This document could be used to avail a higher limit on a credit card, approve home/car loans, etc.

There are three types of Form 16 - Form 16, Form 16A, and Form 16B. Each of which are certificates of tax deducted at income source. Form 16 has two components - Part A and Part B. However, you must not confuse Form 16 Part A and B with Form 16A and Form 16B.

 

• Form 16

Part A of Form 16 includes the name, address, PAN, and TAN of the employer as well as the name and address of the employee. This part also details the period of employment and the value of income tax that has been deducted.

 

Form 16 Part B contains the detailed salary break-up. It also lists the deductions that are allowed under the income tax regulations. It is important for an employee to cross-check that all details mentioned in both parts of Form 16 are accurate.

 

• Form 16A

Form 16A categorically specifies TDS on interest earned on fixed deposits, mutual funds, insurance commission, etc. The name/address of the employee/employer is also included here. The PAN and TAN details of a deductor are mentioned as well.

 

Employers can download Form 16 Part A via the TRACES portal. The employer must verify the contents for authenticity prior to issuing the certificate. If you are changing jobs within a financial year, your employer will provide Part A of Form 16 for the duration of the respective employment period.

 

Here are the components of Form 16:

• Name and address of the employer

• TAN and PAN of the employer

• Employment period and the financial year

• Report of tax deductions and deposits, certified by the employer

   

• Form 16B

Form 16B provides a detailed breakdown of your salary income, including particulars such as basic salary, bonuses, allowances, and additional benefits. This segment helps you comprehend the origins of your income and their impact on your total earnings.

 

Form 16B also verifies the quantum of tax deducted at source while making any property purchase above ₹50 lakh. The TDS amount listed on Form 16B is given by the buyer to the Income Tax department. This is basically a TDS certificate for all tax deducted at source on an immovable property sale.

 

Here are the components of Form 16B:

• A detailed breakdown of your salary

• A comprehensive breakdown of allowances that are exempt u/s 10

• Allowed deductions under the Income Tax Act

   

Form 16B includes the following deductions:

• Deduction for premiums paid on life insurance, contributions to PPF, etc., u/s 80C

• Deduction for interest paid on loans taken for higher education u/s 80E

• Deduction for contributions to pension funds u/s 80CCC

• Deduction for donations made u/s 80G

• Deduction for premiums paid on health insurance u/s 80D

• Deduction for the taxpayer’s self-contribution to a designated pension scheme u/s 80CCD(1B)

• Deduction for interest income earned on savings accounts u/s 80TTA

• Deduction for employee’s contributions to a pension scheme u/s 80CCD(1)

• Deduction for the employer’s contributions to a pension scheme u/s 80CCD(2)

Form 16, Form 16A and 16B are crucial documents that employees require while filing their ITR. However, there are still many contrasting details in the various forms. Here, we look at the differences between Form 16, Form 16A, and Form 16B: