Difference Between Form 16A and Form 16B

While paying salary, the employer deducts the applicable tax and deposits it with the government. Form 16 is a TDS (Tax Deducted at Source) certificate issued by employers to salaried employees. It includes a summary of your salary and the tax deducted during a specific financial year. However, you may earn income from sources other than your salary. That is where Form 16A and 16B come into play. Form 16A addresses tax on non-salary earnings such as rent and interest, while Form 16B pertains to property transactions. Let’s understand what is Form 16A and 16B and the difference between them in detail.

Read Also: Form 16 in ITR - Everything you need to know

Key Differences Between Form 16A And Form 16B

Understanding the difference between Form 16A and 16B is vital for accurate tax compliance and documentation. Here is a brief comparison:

Read Also: How to File ITR for Salaried Employees?

What is Form 16A?

Form 16A is a TDS certificate related to non-salary income like interest, rent, commission, dividends, etc. It contains details like the deductor’s name and address, the deductee's name and address, the deductor's PAN and TAN, and the deductee’s PAN. The Form also contains details about the payment, followed by a certification and verification.

Significance of Form 16A

Form 16A becomes important when you have additional income sources besides your regular salary. Here are a few points highlighting its importance:

• ITR (Income Tax Return): It is necessary for reporting non-salary income while filing your ITR. It helps ensure accurate reporting of your total income and tax compliance.

• Tax Filing: It provides detailed information essential for accurate tax filing. It helps you report income from non-salary sources in a financial year and ensures compliance with tax regulations.

• TDS Tracking: You may use Form 16A to track your TDS paid on non-salary income sources. It summarises TDS deduction by the deductor.

• Income Proof: It serves as a valid income proof widely accepted by lending institutions and government agencies. 

• Loan Applications: Form 16A supports loan applications, as it allows financial institutions to verify your non-salary income and assess your loan eligibility.

Read Also: What is Form 26AS and How to Download It?

How to Fill Form 16A?

Follow these steps to fill out form 16A:

Step 1- Enter the deductor’s name and address, TAN, and PAN.

Step 2- Enter the acknowledgement number for the relevant quarter.

Step 3- Select the nature of payment, including professional, contractual, etc. 

Step 4- Enter the corresponding code for your preferred payment method.

Step 5- Enter the deductee’s name, address, and PAN.

Step 6- Enter the financial year for which the TDS was deducted.

Step 7- Enter the TDS deduction details.

Step 8- View the TDS amount in words.

What is Form 16B?

Besides salary and non-salary income, TDS applies to income received from the sale of a property. This includes land, flats, and buildings. The exception is that it does not apply to the sale of agricultural land. Moreover, TDS is deducted if the property's sale or purchase value exceeds Rs 50 Lakh. Form 16B shows these deductions with a certificate number and the date of the last update.

Significance of Form 16B

Here are a few points highlighting the importance of Form 16B:

• Usage: It shows TDS on the sale of immovable property (excluding agricultural land) when the sale value exceeds Rs 50 lakh.

• Information: It details the TDS deducted by the buyer when purchasing immovable property such as land, a flat, or a building.

• For Property Sellers: Form 16B acts as proof of TDS deduction and deposit made by the buyer to the government, which the seller can use for filing income tax returns.

How to Fill Form 16B?

Follow these steps to fill out Form 16B: 

Step 1- Log in to the TRACES website.

Step 2- Select Form 16B from the Downloads section.

Step 3- Enter details - Form Type (26QB), Assessment Year, Acknowledgment Number, Seller's PAN.

Step 4- Verify and submit.

Step 5- Receive the Request Number after submission.

Step 6- Download the PDF from the Downloads tab using the Request Number.

Step 7- Extract the file - Use the Buyer's Date of Birth (DDMMYYYY) as the password.

Read Also: How to File TDS on Sale of Property Under Section 194IA

Understand Why These Forms Are Important

Let’s look at the reasons why Form 16A and 16B are important: 

• They provide detailed information on an individual taxpayer’s tax deductions. 

• They serve as proof of filing ITR to the government, ensuring compliance with tax regulations. 

• They act as an individual's TDS certificate, confirming the tax deducted at source.

• They certify how much an individual has earned and the amount paid as TDS during a fiscal year. 

• They are crucial for individuals wishing to claim refunds for excess TDS deducted, as they provide the necessary documentation.

• By providing a clear record of earnings and deductions, these forms assist taxpayers in effective tax planning.

How to Obtain Form 16A and Form 16B?

Follow these steps to download Form 16A: 

• Visit the TRACES portal and log in.

• Click on Downloads.

• Choose Form 16A.

• Enter the necessary information.

• Select Submit.

• Download the Form and fulfil the formalities.

Follow these steps to download Form 16B: 

• Log in to the TRACES portal.

• Provide your username and password.

• Navigate to ‘Downloads’.

• Click on Form 16B.

• Provide details like the seller's PAN, assessment year, and the acknowledgement number of Form 26QB.

• Download Form 16B.

Read Also: Personal Loans: Applying Online vs Applying Offline

How Form 16A and Form 16B Affect Personal Loans?

When applying for a Personal Loan, the lending institution focuses on your financial status and repayment capacity. Therefore, they require proof of income to verify your earnings for the year. Salaried applicants must submit Form 16 to show their salary and TDS deductions. Form 16A reflects income from non-salary sources such as rent, commissions, and dividends. Form 16B, on the other hand, details income from property sales or purchases during the year. That is how these forms affect your eligibility to get a Personal Loan.

Impact of Forms on Personal Loan Applications:

• Instant Approval: Complete and accurate income documentation can speed up approval.

• Faster Verification: Forms streamline income and financial status verification.

• Better Interest Rates: Strong income profiles may qualify for better rates.

• Higher Loan Amounts: Demonstrating higher income may increase loan eligibility.

• Smoother Process: These forms simplify the application process.

Conclusion

Understanding what is Form 16A and 16B is essential for effective tax compliance and management in India. While Form 16A is related to TDS on non-salary earnings like rent and interest, Form 16B addresses property transactions. Recognising the difference between Form 16A and Form 16B is vital for efficient tax filing. That is because each Form is crucial for tax documentation, helping individuals meet their tax obligations more clearly and precisely.

Frequently Asked Questions

1. How do Form 16A and Form 16B impact tax filing?

Form 16A and 16B help in accurate tax filing by reporting income from various sources, ensuring all income is included, and taxes are calculated correctly.

2. Can I use Form 16A and Form 16B for loan applications?

Yes, Form 16A and Form 16B can demonstrate additional income sources, supplementing Form 16 for Personal Loan applications.

3. Can Form 16A and Form 16B be used for GST purposes?

Yes. Business owners or self-employed individuals may use these forms for GST purposes.

4. What should I do if there is an error in Form 16A or Form 16B?

If you find an error in Form 16A or 16B, report it to the deductor or contact the income tax department’s grievance redressal department for correction.

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