With the last date for filing income tax returns for FY 2019-2020 fast approaching, it is now more important than ever for individuals to get their tax-related information in order. It is also crucial for taxpayers to account for any TDS amount already deposited with the IT department to claim its refund successfully. In this regard, one must be aware of the functionality of Form 16.
Form 16 is a certificate that reflects the amount of tax an employer deducts from an employee’s salary. The deducted tax amount is known as Tax Deducted at Source (TDS). It is proof that the tax was deducted and paid to the IT Department. Moreover, when an employee submits his/her income tax returns, Form 16 helps ascertain the amount that has already been paid.
Form 16 comprises information such as an employee’s personal details, TDS deducted by the employer, and more. It is segregated into two parts- Part A and Part B encompassing different components. Hence, to develop a complete understanding, an individual needs to learn about the
Form 16A and its components
Form 16A is a detailed representation of the tax amount that was deducted from the employee’s salary and paid to the government by the employer. These are the components of Form 16A -
● Timeframe: It represents the period during which the employee (taxpayer) was underemployment for the given financial year.
● Personal information: Personal details of the employer and employee is represented in part A of Form 16. Some of the information includes names, PAN details, proof of address, and more.
● Assessment year: It refers to the year during which a salaried employee has to file his or her ITR. For example, income earned between 1st April 2019 and 31st March 2020 will be assessed in 2021.
● Outline of salary: Form 16A consists of information related to the salary earned by the employee.
● Date of tax deduction: It is the date on which tax was deducted from the employee’s salary by the employer.
● Quarterly tax details: The date and amount of TDS deducted on a quarterly basis are mentioned here.
● Acknowledgment Number: Form 16A consists of the acknowledgment number generated when the TDS payment was made.
● Date of tax deposit: It refers to the date on which the tax amount deducted from the salary was deposited with the Income Tax Department.
It is essential to keep in mind that TDS is applicable to various transactions, but purchase made using a credit card is free of such taxes. Now, to understand the difference between 16A and 16B, it is crucial to be aware of the details of the latter.
Form 16B and its components
Form 16B comprises information related to the employee’s income, the amount of tax paid, tax dues, and more. The components of Form 16B are given below -
● Detailed salary information: Form 16B consists of detailed information about an employee’s salary structure, including House Rent Allowance, leave encashment, and more.
● Gross Income: It is the total amount of income earned by an employee and includes both salary and income from other sources.
● Tax exemptions: It consists of the salary components that are exempted from tax, such as child’s education, medical and more.
● Salary deductions: This includes a contribution towards Provident Fund, tax saving mutual funds, and more.
● Net taxable salary: Tax liability calculated after deductions made from gross income are included here.
● Tax payable: The amount of taxes payable, due, and deducted are all mentioned in Form 16B.
● Rebate and relief: Income tax benefits such as relief under Section 89 and rebate under Section 87 are provided here.
The difference between 16A and 16B is now clear. While the former consists of details of the tax deducted, the latter contains details of the taxpayer’s salary.
Documents such as Form 16 serve as income proof when applying for financial instruments such as the Bajaj Finserv RBL Bank SuperCard. This card comes with various benefits such as interest-free cash withdrawal for up to 50 days, emergency advances, and more.
Self-employed individuals such as businesspersons enjoy tax rebates if they initiate 50% of their transactions using digital means of payments. Hence, using a card like this is an ideal option for them. One can apply for a Bajaj Finserv RBL Bank SuperCard online through a hassle-free application procedure involving minimal documentation.
Nonetheless, before making payments using such a card, it is essential to know how to use a credit card wisely and eliminate the risks of non-payments. These financial instruments offer an interest-free period of up to 50 days, making it easier to bear the credit repayment liability.
Moreover, there are other benefits that accompany a credit card, including interest-free ATM withdrawal, conversion into EMIs, robust security, etc. Credit card users must, therefore, know how to make the most out of a credit card to use it to their advantage.
Financial institutions such as Bajaj Finserv also provide various pre-approved offers on an extensive range of financial products such as loans and credit cards. These offers expedite the process of availing these advances to quite an extent. Make sure to check your pre-approved offer by providing your name and contact number.
Knowing the differences between 16A and 16B can help individuals file their income tax returns more easily. It can also consequently help them to avail financial assistance in the form of loans and credit cards, by way of proof of income.