Form 16 A & B: The Two Sides You Need to Know

Attention all salaried employees in India! Are you ready to unravel the mystery behind Form 16? This vital document not only summarises your salaried income but also holds the key to your tax deductions. But wait, did you know there are two TDS certificates, Form 16A & 16B? Each part provides unique information about your finances that you must learn to file your income tax returns accurately. So, get ready to dive into the exciting world of Form 16 and explore the fascinating details of Form 16 A and Form 16 B. Get your popcorn ready, and let's get started!

What is Form 16A?

Form 16A is a vital document in the Indian income tax system. It serves as a certificate that a deductor issues to the deductee as proof of tax deducted at source (TDS) on payments other than salary, such as rent, professional fees, commission, interest, and more.

This certificate contains critical information, including the name and PAN of the deductor and deductee, the nature of the payment, the amount paid, and the TDS deducted and deposited with the government.

Form 16A is essential as a deductee because it allows you to claim TDS credit while filing your income tax returns. Without this certificate, you might end up paying more taxes than you owe.

Suppose you are a freelancer who has provided services to a company for which they paid you a total amount of ₹50,000. The company must deduct TDS on this payment at 10% under the Income Tax Act, which amounts to ₹5,000.

Now, the company will generate a Form 16A certificate in your name and issue it to you. It will contain details such as your name and PAN, the company's name and PAN, the nature of payment (freelance services), the amount paid (₹50,000), and the TDS deducted (₹5,000).

As a freelancer, you can use this Form 16A certificate to claim TDS credit while filing your income tax returns. 

For instance, let's say your total tax liability for the year is ₹30,000, but the TDS deducted by the company is ₹5,000. In that case, you can claim a credit of ₹5,000 in your income tax return and pay only the balance amount of ₹25,000.

So, Form 16A serves as proof that the TDS has been deducted and deposited with the government and enables you to claim TDS credit, thereby reducing your tax liability.

Who issues Form 16A?

Form 16A is not issued by employers but by financial institutions, entities, or individuals who have deducted tax at source on your income other than salary. For instance, if you have earned income from interest on fixed deposits, mutual fund appreciation, insurance commission, or freelancing, you may receive Form 16A from the deductor.

When is Form 16A issued?

Form 16A is typically published quarterly and must be issued by the deductor within 15 days from the due date of furnishing the statement of tax deducted at source. 

What information does Form 16A Contain?

Form 16A is the go-to document for anyone looking to get a clear picture of their Tax Deducted at Source (TDS) in India. This statement of TDS is a powerhouse of information that includes the following details:

• Name and address of the deductor (the entity that deducts the tax at source)
• PAN (Permanent Account Number) of the deductor.
• TAN (Tax Deduction Account Number) of the deductor.
• Name and address of the deductee (the person from whose income the tax is deducted)
• PAN of the deductee.
• Nature of payment on which TDS is deducted (e.g., rent, commission, interest, etc.)
• Amount paid to the deductee
• Amount of TDS deducted
• Date of TDS deduction
• Date of deposit of TDS with the government.
• Assessment year for which TDS is deducted.

Eligibility Criteria of Form 16A

Form 16A is a TDS statement issued to the deductee by the deductor. Here are the eligibility criteria for both the deductor and the deductee to obtain Form 16A:

For the deductor

• The deductor must have a valid Tax Deduction Account Number (TAN) issued by the Income Tax Department.
• The deductor must file their TDS statements within the due date.

For deductee

• The deductee must have a valid PAN issued by the Income Tax Department.
• The deductee must have TDS from their income other than salary payments such as rent, professional fees, commission, interest, etc.
• The deductee must claim credit for the TDS while filing their income tax returns.

It is necessary to note that Form 16A is only issued for TDS deductions on payments other than salary. Salary-related TDS deductions are reported on Form 16, issued by the employer to their employees.

Benefits of Form 16A

Here are the benefits of Form 16A:

1. Proof of TDS: Form 16A serves as proof of TDS for the deductee. It contains details of TDS deducted and deposited with the government, which helps the deductee claim TDS credit while filing their income tax returns.

2. Ease of filing: Form 16A makes filing income tax returns easier for the deductee. They can easily access the details of TDS deducted and deposited, which can be directly filled in the income tax return form.

3. Transparency: Form 16A ensures transparency in the TDS process as it contains all the relevant details, such as the name and PAN of the deductor and deductee, the nature of payment, the amount paid, and the TDS deducted and deposited with the government.

4. Compliance: Issuing Form 16A is mandatory for the deductor. It ensures that the deductor complies with the TDS provisions and helps prevent tax evasion.
Legal validity: Form 16A is a legal document and can be used as evidence in case of any dispute or legal proceeding related to TDS.

Overall, Form 16A is a crucial document for both the deductor and deductee, as it serves as proof of TDS and ensures compliance with the TDS provisions.

How to get Form 16A?

To get Form 16A, both the deductor and the deductee need to follow certain steps. Here's how they can obtain it:

As a Deductor

• Visit the TRACES website and log in using your credentials.
• Select 'Form 16A' in the drop-down menu under the 'Downloads' tab.
• You will need to enter information such as the Financial Year, Quarter, and Form Type.
• Verify the details and click on 'Request for Form 16A'.
• Download the requested Form 16A in the ZIP file format.
• Extract the ZIP file's contents and share it with the relevant deductees.

As a Deductee

• Request the deductor to provide you with Form 16A for the relevant financial year and quarter.
• Ensure that the details mentioned in the form, such as your name, PAN, and TDS amount, are accurate and match your records.
• In case of any discrepancies, contact the deductor and get them rectified.
• Use Form 16A to claim TDS credit while filing your income tax returns.

It is essential to note that Form 16A can only be generated and downloaded from the TRACES portal by the deductor and not by the deductee.

How to File ITR with Form 16A?

Filing income tax returns (ITR) can seem daunting for many taxpayers. However, with Form 16A in hand, the process can be much smoother. Here are the steps to file ITR with Form 16A:

1. Gather all necessary documents: Before filing your ITR, you must gather all the relevant documents, such as Form 16A, bank statements, and other income-related documents.

2. Verify Form 26AS: Form 26AS is a tax credit statement that shows the amount of tax deducted on your behalf and deposited with the government by the deductor. Verify Form  26AS with Form 16A to ensure there are no discrepancies.

3. Determine the appropriate ITR form: The ITR form that you need to file depends on your income sources, such as salary income, capital gains, business income, or income from other sources.

4. Fill in the required details: Enter all the required details, such as income details, personal information, tax deductions, and other relevant details, in the ITR form.

5. Attach Form 16A: Attach Form 16A while filing your ITR to claim credit for the TDS amount already deducted by the deductor.

6. Verify the ITR: Before submitting your ITR, verify all the details entered and ensure there are no errors or discrepancies.

7.  Submit the ITR: Once you have verified all the details, submit the ITR online on the Income Tax Department's e-filing website or offline by mailing the physical copy to the designated ITR processing centre.

Filing your ITR with Form 16A can simplify the process and ensure you claim credit for the TDS already deducted. It is essential to make sure that all the details are correctly entered and that there are no discrepancies to avoid penalties or legal complications.

Is it Mandatory to have Form 16A?

Form 16A is a TDS certificate issued in non-salary cases, and it is not mandatory to have Form 16A to file ITR. Form 16A is usually automatically generated and issued by the tax deductor to the taxpayer. However, to verify if the deductible tax is paid to the government, the assessee can view their Form 26AS online or obtain a Form 16A certificate from the deductor. 

What is Form 16B?

Form 16B is a vital document in the Indian income tax system. It serves as a certificate that a deductor issue to the deductee as proof of tax deducted at source (TDS) on the sale of immovable property, such as land, house, or commercial property.

This certificate contains critical information, including the name and PAN of the deductor and deductee, the property's address, the amount paid for the property, and the TDS deducted and deposited with the government.

Form 16B is essential for a deductee because it allows them to claim TDS credit while filing their income tax returns. Without this certificate, they might end up paying more taxes than they owe.

Suppose you have sold an immovable property for ₹1 crore, and the buyer has deducted TDS at the rate of 1% under the Income Tax Act, which amounts to ₹1 lakh. Now, the buyer will generate a Form 16B certificate in your name and issue it to you. It will contain details such as your name and PAN, the buyer's name and PAN, the property's address, the amount paid (₹1 crore), and the TDS deducted (₹1 lakh).

As a seller, you can use this Form 16B certificate to claim TDS credit while filing your income tax returns. For instance, let's say your total tax liability for the year is ₹20 lakh, but the TDS deducted by the buyer is ₹1 lakh. In that case, you can claim a credit of ₹1 lakh in your income tax return and pay only the balance amount of ₹19 lakhs.

So, Form 16B serves as proof that the TDS has been deducted and deposited with the government and enables you to claim TDS credit, thereby reducing your tax liability.

Who issues Form 16B?

Form 16B is issued by the buyer of the immovable property or the person responsible for deducting TDS on behalf of the buyer. The buyer must deduct TDS at the rate of 1% and issue Form 16B to the seller.

When is Form 16B issued?

Form 16B must be issued within 15 days from the due date of furnishing the statement of tax deducted at source. The buyer can download Form 16B from the TRACES website after submitting the TDS statement in Form 26QB.

What information does Form 16B contain?

Form 16B is the go-to document for anyone looking to get a clear picture of their Tax Deducted at Source (TDS) on the sale of immovable property in India. This statement of TDS is a powerhouse of information that includes the following details:

• Name and address of the deductor (the buyer of the immovable property)
• PAN (Permanent Account Number) of the deductor
• Name and address of the deductee (the seller of the immovable property) 
• PAN of the deductee 
• Address of the property sold 
• Amount paid for the property 
• Amount of TDS deducted 
• Date of TDS deduction 
• Date of deposit of TDS with the government 
• Assessment year for which TDS is deducted

Eligibility Criteria for Form 16B

For the buyer: The buyer of the immovable property must have a valid PAN issued by the Income Tax Department. The buyer must deduct TDS at the rate of 1% of the sale consideration amount. The buyer must deposit the TDS amount with the government within the specified due date.

For the seller: The seller of the immovable property must have a valid PAN issued by the Income Tax Department. The seller must have sold an immovable property for a consideration of more than ₹50 lakhs. The seller must have provided their PAN to the buyer.

Benefits of Form 16B

Here are some benefits of Form 16B:

1. Proof of TDS: Form 16B is proof of tax deducted at source (TDS) on the sale of a property. It serves as a document for the buyer to show that TDS has been deducted and deposited with the government.

2. Compliance with Tax Laws: As per the Income Tax Act, TDS must be deducted on the sale of immovable property. By issuing Form 16B, the deductor complies with the tax laws and avoids any penalty or legal action.

3. Easy Processing of Property Transactions: The buyer can efficiently process the property transaction by submitting Form 16B to the registrar's office while registering the property. This helps in avoiding any delay or hassle in the registration process.

4. Helps in Filing Income Tax Returns: Form 16B provides all the necessary details required for the buyer to claim credit for the TDS deducted while filing their income tax returns.

5. Serves as a Valid Document: Form 16B is a valid document that contains all the necessary details of the TDS deducted and deposited. It can be used as proof of payment in case of any dispute or legal proceeding.

How to get Form 16B? 

To obtain Form 16B, the buyer of the immovable property must follow these steps: 

• Visit the TRACES website and log in using your credentials
• Under the 'Downloads' tab, select 'Form 16B'
• Enter the required details, such as the seller's Assessment Year, Acknowledgment Number, and PAN
• Click on 'Submit' and verify the details
• Download the requested Form 16B in the ZIP file format
• Extract the ZIP file's contents and share it with the seller of the property

It is essential to note that Form 16B can only be generated and downloaded from the TRACES portal by the buyer and not by the seller.

How to file ITR with Form 16B?

If you are a seller of the immovable property, you can use Form 16B to claim credit for the TDS amount deducted by the buyer while filing your income tax returns. Here are the steps to file ITR with Form 16B: 

1. Gather all necessary documents: Before filing your ITR, you must gather all the relevant documents, such as Form 16B, bank statements, and other income-related documents. 

2. Verify Form 26AS: Form 26AS is a tax credit statement that shows the amount of tax deducted on your behalf and deposited with the government by the buyer. Verify Form 26AS with Form 16B to ensure there are no discrepancies. 

3. Determine the appropriate ITR form: The ITR form that you need to file depends on your income sources, such as salary income, capital gains, business income, or income from other sources. 

4. Fill in the required details: Enter all the required details, such as income details, personal information, tax deductions, and other relevant details, in the ITR form. 

5. Attach Form 16B: Attach Form 16B while filing your ITR to claim credit for the TDS amount already deducted by the buyer. 

6. Verify the ITR: Before submitting your ITR, verify all the details entered and ensure no errors or discrepancies.

7. Submit the ITR: Once you have verified all the details, submit the ITR online on the Income Tax Department's e-filing website or offline by mailing the physical copy to the designated ITR processing centre.

Filing your ITR with Form 16B can simplify the process and ensure that you claim credit for the TDS already deducted. It is essential to make sure that all the details are correctly entered and that there are no discrepancies to avoid penalties or legal complications.

Is it Mandatory to have Form 16B? 

Form 16B is a TDS certificate issued in property transactions, and it is not mandatory to have Form 16B to file ITR. However, to verify if the deductible tax is paid to the government, the buyer can view their Form 26AS online or obtain a Form 16B certificate from the seller.

Difference Between Form 16A & 16B

Form 16A and Form 16B are two different types of TDS certificates issued under the Indian Income Tax Act. Here are the key differences between Form 16A and Form 16B:

Difference Between Form 16A & 16B

Particulars	Form 16A	Form 16B
Purpose	Form 16A is a TDS certificate issued by the deductor to the deductee for TDS deductions on payments other than salary, such as rent, professional fees, commission, interest, etc.	Form 16B is a TDS certificate issued by the buyer to the seller for TDS deductions on the sale of immovable property.
Issuer	Form 16A is issued by the deductor to the deductee	The buyer of the immovable property issues Form 16B to the seller.
Details Mentioned	Form 16A contains details such as the name and PAN of the deductee, the name and PAN of the deductor, the TAN of the deductor, the amount of TDS deducted, and other relevant details.	Form 16B contains details such as the name and PAN of the buyer and the seller, the address of the property, the consideration paid for the property, and the TDS amount deducted.
Issuance Deadline	Form 16A must be issued by the deductor within 15 days of filing the TDS return.	Form 16B must be issued by the buyer within 15 days of filing Form 26QB, which is the challan-cum-statement for the TDS payment.
Mode of Issuance	Form 16A can be downloaded by the deductor from the TRACES portal and shared with the deductee	Form 16B can be downloaded by the buyer from the TRACES portal and shared with the seller.
Applicability	Form 16A is applicable to all non-salary TDS deductions	Form 16B is applicable only to TDS deductions on the sale of immovable property.

The Bottom Line

Form 16A and Form 16B may seem like two peas in a pod, but they serve different purposes in the world of income tax. From ensuring accurate TDS deductions to simplifying the ITR filing process, both these forms play a crucial role for both deductors and deductees. So, whether you are a salaried employee or a freelancer, ensure you know which form 
to file your taxes correctly and avoid legal complications. Filing taxes can be a breeze with the right knowledge and tools.