Form 16 is the total of the amount (including basic salary and other allowances) paid to the employee and the taxes deducted during a financial year. The form is an indication that tax was deposited by the employer to the income tax (I-T) department.
It may be noted that if an employer has not deducted any TDS, then Form-16 won’t be issued. Ho However, an employer can issue a salary statement.
To avoid mistakes while filing ITR, taxpayers must recalculate the overall tax based on Form 16 issued.
Form 16 Part A: The Part A of Form 16 has TAN (tax deduction and collection account number) and PAN (permanent account number) of the employer, name, and address (both employer and employee), assessment year and work duration. The Part A of the form also features a summary of tax deducted from your income and deposited to the tax department as per the quarterly TDS return filed by the employer.
Form 16 Part B: The Part B of Form 16 has the detail of the salary paid during a financial year. The Form mentions all – the breakup of your salary, the deduction claimed under section 80, Section 80C for EPF, PPF, NSC, life insurance premium or Section 80D for insurance , Section 80G. There also are details of the entire taxable income and tax deducted on such income.
What is Form 26AS (Tax Credit Statement)
A taxpayer may pay tax in any of the subsequent forms:
* Tax Deducted at Source (TDS)
* Tax Collected at Source (TC S)
* Advance tax or self-assessment tax or payment of tax on regular assessment
The I-T department maintains the database of the entire tax paid by the taxpayer (i.e., credit within the account of a taxpayer). Form 26AS is an annual statement maintained under ‘Rule 31AB ‘ of the I-T disclosing the small print of the tax credit in a taxpayer’s account as per the database of the tax department. In other words, Form 26AS will reflect the details of tax credit appearing within the Permanent Account Number (PAN) of the taxpayer as per the database of the tax department. The tax credit will cover TDS, TCS, and tax paid by the taxpayer in other forms like advance tax, self-assessment tax, etc.
Difference between Form 16 and Form 26AS:
Form 16 is a TDS certificate (on salary) and Form 26AS contains details about the tax that has been deducted/deposited with the government on taxpayers’ behalf by deductors (banks or employers). The form also has details about tax credits.