I’ve always just filed my ITR with basic salary and bank interest. This year I did a few freelance gigs and got a Form 16A from my client. What does this mean and how do I use it while filing ITR?
I understand, it can be a little confusing since you’ve been filing your ITR just based on salary and bank interest incomes so far, and you won’t be familiar with Form 16A at all.
Let me explain what is it and how to use while filing ITR.
What is Form 16A?
So, Form 16A provides details of TDS on income other than salary, such as freelance payments, commissions, and professional fees. It is issued to non-salaried individuals when their payer has deducted TDS.
Also, if you’re applying for a loan, Form 16A is an important document that can support your application.
Here are a few examples of when Form 16A is issued:
- Rental income
- Professional fees
- Agent commissions
- Interest on FDs
- Interest on securities & dividends
What does Form 16A include?
Let’s take a look at what are the components of Form 16A:
- Deductor’s name, PAN, and TAN: The details of the entity deducting the TDS — like your client or bank.
- Deductee’s name, PAN, and TAN: Your details since you’re receiving the payment.
- Nature of payment: Section code and description of your income type (e.g., rent, professional fees, dividend).
- TDS receipt number: A unique transaction number linking the payment to the government’s database.
- Date of deposit and deposited tax amount: The date and amount of TDS deposited.
I’ve attached a sample Form 16A for your reference below.
You can also verify all of these details from Form 26AS and AIS (Annual Information Statement), which act as a summary of your TDS credits from different deductors, helping you verify your tax payments when filing.
Difference between Form 16 and Form 16A
For obvious reasons, many people get confused between Form 16 (which is used for salaried employees) and Form 16A (specifically for non-salaried individuals). Here’s a quick comparison to clear things up:
Where to get Form 16A?
Now, how do you get your hands on Form 16A?
See, it’s not issued by the Income Tax Department directly. Instead, your deductor (such as the client, bank, or any other entity deducting TDS) provides you with the form.
Since TDS returns are filed quarterly, Form 16A is generated by the deductor on a quarterly basis. This means you’ll receive a separate Form 16A for each quarter you’ve worked with a client.
How to use Form 16A for filing ITR?
While you don’t need to physically attach Form 16A to your ITR, the information it contains is essential for accurate tax filing. Here’s how to use it while filing ITR:
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Fill in income details: You can use the information from Form 16A to fill in the sections of your ITR related to income from which TDS was deducted (like interest or rental income).
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Claim TDS credits: The TDS amount mentioned in Form 16A helps you claim the tax credit in your ITR, lowering your overall tax liability by accounting for the tax already deducted at source.
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Reconcile with Form 26AS: Cross-check the TDS details in Form 16A with your Form 26AS (tax credit statement). And if you find any differences, you must get in touch with the deductor to ensure your tax credit claim is accurate.
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Maintain supporting documents: Form 16A also helps as a supporting evidence in case the tax department scrutinizes your TDS claims.
Hope this answers your query!