An employer issues Form 16A or TDS certificate for non-salary payments. This includes brokerage, interest, professional fees, contractual payment, rent, etc. This certificate contains the details of the TDS deduction and the respective payment.
Unlike Form 16, which concerns salary structure, Form 16A of income tax deals with TDS from the mentioned factors -
- Profit and loss from a business or profession
- Earning from a property or rent
- Capital gains
- Additional sources.
The tax deducted at source and tax collected at source are two essential factors concerning revenue collection. These factors facilitate the convenient way of tax payment on income earned. ITR Form 16A means
The Income Tax Act 1961 has mandated TDS deduction on all non-salary payments of an assessee if his/her annual taxable income exceeds ₹30000 during a financial year.
Hence, employers are obligated to deduct taxes at specific rates before paying the salary to their employees.
The deducted amount is deposited as TDS with the central government’s exchequer. To understand what ITR Form 16A is, we need to identify its purpose first.