Section 57 – Deduction on Income from other Sources
May 4, 2018
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May 4, 2018

Everything You Want to Know About Form 16A

Last Update Date : May 04, 2018

form 16A

At the time of tax return filing various documents provide the necessary data to validate and provide information regarding sources of incomes and Tax Deducted at Source (TDS) of the individual. Form 16A is one of the documents a non-salary individual must have during filing, which you can read about in this comprehensive guide.

What is Form 16A?

Form 16A is a TDS certificate that describes tax deductions from income sources other than salary. Also, it gives an idea about the nature of payment, source of the income and tax deducted by the Income Tax Department for that year. For e.g.: A person earnings from commissions, brokerage etc.

If a person has a fixed deposit then TDS is deducted from the interest earned from it, TDS deductions are mandatory on rent receipts, and any other sources, which is not salary, if such income crosses a specified threshold. According to the Income Tax Act, TDS is applicable on all the payments expected to be made within a year which is more than Rs. 30,000 or else exempted.

Difference Between Form 16 and Form 16A

Form 16 is also a TDS certificate but for salaried employees. According to the Income Tax Act, if in a financial year your salary is more than Rs 2,50,000, than you are liable to pay tax to the Income Tax Department (ITD).

Components of Form 16A

Form 16A

The various components to Form 16A are:

  1. Name of the Deductor: It consists of basic information regarding the person who makes the payment like – Deductor’s name, address and payment is deducted as a percentage of the income earned as TDS.
  2. Name of Deductee: This section includes the name and address of the person who is earning through payment made by Deductor.
  3. Unique identification of the Deductor: Unique identification of the Deductor such as his/her PAN and TAN numbers must be filled in this section.
  4. Unique identification of the Deductee: This section includes unique identification of the Deductee which is PAN number to verify that tax is paid on his behalf.
  5. Total amount Due to the Deductee: This section consists of the total amount of payment made to the Deductee.
  6. Amount Deducted : As the name suggests, the amount which must be paid to Income Tax Department is calculated based on income of the Deductee and mentioned as a summary under this section.
  7. Amount paid to the income tax Department: In this section details of the payment made to the central government is mentioned with respect to deductee.

What is TAN And PAN Number?

TAN or Tax Deduction and Collection Account Number, is a 10-digit alphanumeric unique number. It is allotted to those who are expected to deduct or collect tax from the payments made by them under the Income Tax Act,1961.

PAN or Permanent Account Number, is a unique identification 10-digit alphanumeric number. It is allotted to all the legal beings under the Income Tax Act,1961.

How to Get Form 16A?

Generally, this document is issued by the Deductor, the one who makes the payment and collects the taxes on behalf of the deductee. It is issued for a particular Financial Year showing details regarding the payment made and tax collected from the same.

The steps to download Form16A from TRACES website is as following:

Step 1: Deductor logs in to TRACES.

Getting Form 16A from Traces _01

Step 2: Go to Downloads tab and select Form 16A.

Getting Form 16A from Traces _02

Step 3: Enter the details like Financial year, Quarter, form type, PAN etc. and click on add. You can either select for bulk Pan download or single form download as per your need

Getting Form 16A from Traces _03

Step 4: Now details that will be shown in Form 16A will be displayed where you can check and update details if you want or else click Submit.

Getting Form 16A from Traces _04

Step 5: After this validation of the Deductor’s page comes up which asks for KYC through digital signature or Normal KYC providing the F.Y., Form Type, Quarter for which you are providing KYC.

Getting Form 16A from Traces _05

Step 6: Enter the details i.e. Authentication code. If you do not have the same you can fill the details below it.

Getting Form 16A from Traces _06Step 7: After the KYC details are done with, all the functions that can be done by Deductor on traces is provided. Select the Download Form 16A and click Proceed with Transaction.

Getting Form 16A from Traces _07

Step 8: Next thing that pops up on the screen is the Download Request Confirmation page that contains Request Number for the request of download of Form 16A.

Getting Form 16A from Traces _08

Step 9: The file requested can be searched by using requested date or requested number or simply you can apply for view all. (In case of Submitted status kindly wait for 24-48 hours).

Getting Form 16A from Traces _09

Step 10: Click on the row you want to select and click HTTP Download.

Step 11; If you don’t have Traces Pdf Utility you will not be able to see the file in PDF format.

Step 12: Select requested downloads and you will be able to see link to download utility as “Click here to download the utility”.

Step 13: Download PDF utility for PDF convertor under the name TRACES-PDF-CONVERTOR V 1.4 L. (Also make sure you have java 8 update 45, JRE version 1.7 or above.)

Step 14: Run the downloaded zip folder of utility (under name TRACES-PDF-CONVERTOR) with Java and browse the pdf file generated for Form 16A and fill your TAN number as your password.

Getting Form 16A from Traces _10

Step 15: Select the folder where you want to save the file (s) and proceed.

Form 26AS can work as a substitute for the same, which can be downloaded by the Deductee online which will show all sources of his income with TDS against year for that individual.

When is Form 16A Required?

It must be presented to the Income Tax Department at the time of filing your income tax return to show and verify that you have paid taxes on other sources of income (other than salary). Banks and financial institutes accept this as a legal document for verification and hence it is mandatory to present it, if you have applied for a loan be it any housing plan loan, vehicle loan, personal loan etc.

The Type of Payments Subjected to TDS

Chapter XVII of the Income-tax Act, 1961 mentions the statutory provision for tax deduction at source. Under this section the rates, provisions of TDS, and the exceptions (tax exempted provisions) are described. The following types of incomes have provisions for TDS (as applicable based on the non-salary earning and excluding exemptions, if any):

  1. Dividends (Section 194)
  2. Interest earned on securities (Section 193)
  3. Interest earned other than interest on securities (Section 194A) — Interests earned on Bank deposits come in this category
    (Note: There is no TDS for the interest earned on savings bank account if the amount is below Rs. 10000. However, the tax is payable by the account holder if he matches the requirement.)
  4. Payments in respect of deposits under National Savings Scheme etc. (Section 194EE)
  5. Payments for repurchase of units by Unit trust of India or a Mutual Fund (Section 194F)
  6. Prizes from winning lottery or crossword puzzles (Section 194B)
  7. Commission etc. On sale of lottery tickets (Section 194G)
  8. Prizes from winning horse race (Section 194BB)
  9. Payment of Insurance Commission (Section 194D)
  10. Payments to contractors and sub-contractors (Section 194C)
  11. Payments to non-resident sportsmen or sports associations (Section 194E)
  12. Commission or brokerage, etc. (Section 194H)
  13. Rent (Section 194-I)
  14. Fees for technical or professional services (Section 194J)
  15. Payment of Compensation on acquisition of specific types of immovable property (Section 194LA)
  16. Other sums, for example, payment to a foreign company or a non-resident (not being a company), of any interest (not being interest on securities) or any other amount subject to Income tax (non-salary) (Section 195).
  17. Income payable “net of tax” i.e. where, under an agreement or arrangement the income-tax is born by the person by whom the income is outstanding to the receiver. This means, the tax amount will also be added to the income which later will be deducted as Income Tax. (Section 195A)
  18. Income from shares of Indian company or foreign currency bonds, referred to in Section 115 AC. (Section 196C)
  19. Income in respect of units, as referred in Section 115AB, payable to an Offshore Fund (Section 196B)
  20. Income of Foreign Institutional Investors from securities referred to in Section 115AD. However, if capital gain arises from transfer of securities referred to in Section 115AD, no tax is deductible on payment to a Foreign Institutional Investor (Section 196D)
  21. Section 206C prescribes collection of tax at source on specified items.

Rates of TDS for Various Non-Salary Incomes approved by Form 16A

Different tax rates are applied to different types of Non-salary incomes and varies accordingly. Following contains the list of different types of earnings, the rates and cut offs of exemptions:

Sections Nature of Income When to deduct Rate of TDS

 

192 Normal Salary provided to individuals, which is estimated yearly. When estimated (monthly at the time of payment) income exceeds the tax-free limit Rates are according to the tax rate slabs (30% if no valid PAN)
192A Payment of accumulated balance

By the employer under Provident fund scheme to employees.

When the amount or aggregate amount of payment exceeds Rs. 50,000/- 10%

(30% if no valid PAN)

193 Interest on securities

·         any debentures or securities for money issued by or on behalf of any local authority or a corporation established by a Central, State or Provincial Act;

 

·         any debentures issued by a company where such debentures are listed on a recognised stock exchange in accordance with the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and any rules made there under C)

 

·          any security of the Central or State Government;

 

·          interest on any other security

At the time of payment or credit, when sum of money exceeds Rs. 10,000/-

While in case of Debentures threshold limit is Rs. 5000/-

 

 

10%

(20% if no valid PAN)

194 Dividend except dividend mentioned in section 115O Before making payments to shareholder, when amount exceeds Rs. 2500/- 10%

(20% if no valid PAN)

 

194A Interest other than “Interest on securities” At the time of credit/Payment, whichever occurs first and when the sum exceeds Rs. 5,000/-

 

However, limit is Rs. 10,000/- when interest is credited by any bank including co-operative banks.

10%

(20% if no valid PAN)

 

194B/194BB Income from winnings from lotteries, crossword puzzles, card games, and any other games of any sort and winnings from horse races. Winning from lotteries

Rs. 10000/-

Horse Races

Rs. 10,000/-

30%

(30% if no valid PAN)

194C Payments to contractors/ sub-contractors At the time of credit/payment whichever occurs first.

When amount of contract exceeds Rs. 30,000/- or when yearly sum of contract exceeds Rs. 1,00,000/-

 

For payment to contractor/ sub-contractor:

·         Who is not an individual/HUF (20% if no valid PAN) – 2%

·         Who is an individual/HUF (20% if no valid PAN)

 

194D Insurance commissions

 

At the time of credit/payment whichever occurs first.

When the amount exceeds Rs. 15,000/-.

5%

(20% if no valid PAN)

 

194DA Payment under life insurance Policy (including bonus) At the time of payment when the aggregate yearly amount of the same exceeds Rs. 1,00,000/-. 1%

(20% if no valid PAN)

 

194E Payment to Non-Resident Sportsmen or Sports Association

 

At the time of credit/payment whichever occurs first. 20%

(20% if no valid PAN)

 

194EE Payment in respect of deposit under National Savings Scheme (NSS) At the time of credit/payment whichever occurs first and when it exceeds Rs. 2500/- 10%

(20% if no valid PAN)

194F Payment because of repurchase of unit by Mutual Fund or Unit Trust of India. At the time of credit/payment whichever occurs first 20%

(20% if no valid PAN)

194G Commission on sale of lottery tickets At the time of credit/payment whichever occurs first, when amount exceeds Rs. 15000/ 5%

(20% if no valid PAN)

194H TDS on commission brokerage For A.Y. 2018-19 At the time of credit/payment whichever occurs first, when amount exceeds Rs. 15000/- 5%

(20% if no valid PAN)

194I Rent At the time of credit/payment whichever occurs first, when amount exceeds Rs. 1,80,000/- ·         10% –   If rent is for land, building or furniture (20% if no valid PAN)

 

·         2%   –   If rent is for machinery, plant or equipment (20% if no valid PAN)

194IA Payment on transfer of certain immovable properties other than agricultural land. At the time of credit/payment whichever occurs first, when amount exceeds Rs. 50 lakhs. 1%

(20% if no valid PAN)

194IB Rent payable by an individual or HUF not covered u/s194I Tax is deducted at the time of credit of rent- for the last month of previous year or last month of tenancy if the property is vacated during the year, to the account of payee or when payment is done in cash, by issuing cheque, DD or any other mode. Threshold limit is Rs. 50,000/- per month, deducted at 5%.

 

194IC Payment of consideration under Joint Development Agreement or other similar agreement. At the time of credit/ payment whichever occurs first Threshold limit is Nil TDS to be deducted @ 10%
194J Any sum paid by way of

a) Fee for professional services,

b) Fee for technical services

c) Royalty,

d) Remuneration/fee/commission to a director or

e) For not carrying out any activity in relation to any business

f) For not sharing any know-how, patent, copyright etc.

At the time of credit/payment whichever occurs first, when amount exceeds Rs. 30,000/- 10%

In case of payments received to a payee, as a person engaged in the business of operation of call centre. (20% if no valid PAN)

194LA Payment of interest on certain immovable property other than agricultural land At the time of credit/payment whichever occurs first, if amount exceeds Rs. 2,50,000/- 10%

(20% if no valid PAN)

194LB Payment of interest on infrastructure debt fund to non-resident or foreign company At the time of credit/payment whichever occurs first 10%

(20% if no valid PAN)

194LBC Income in respect of investment in securitisation trust At the time of credit/payment whichever occurs first ·         25% –  for residents’, individual or HUFs

·         30% – for other residents

·         40% – for non-residents companies

·         30% – For non-residents other than company

194LBA Certain income from units of a business trust At the time of credit/payment whichever occurs first 10%

(20% if no valid PAN)

194LBB Investment Fund paying an income to a unit holder shall deduct tax therefrom At the time of credit/payment whichever occurs first 10%

(20% or rate applicable whichever is higher, if no valid PAN)

194LC Payment of interest by an Indian Company or a business trust in respect of money borrowed in foreign currency under a loan agreement or by way of issue of long-term bonds (including long-term infrastructure bond) At the time of credit/payment whichever occurs first 5%
194LD Payment of interest on rupee denominated bond of an Indian Company or Government securities to a Foreign Institutional Investor or a Qualified Foreign Investor At the time of credit/payment whichever occurs first 5%
195 Other sums At the time of credit/payment whichever occurs first Average rates as applicable
196A Foreign companies’ unit holder of Mutual Fund At the time of credit/payment whichever occurs first ·         10% – In case of a company

·         20% – In case of a person other than a company

196B Income from units (including long-term gains on transfer of such units) to an offshore fund At the time of credit/payment whichever occurs first 10%

(20% if no valid PAN)

196C Income from foreign currency bonds or GDR (including long-term capital gains tax on transfer of such bonds) (not being dividend) At the time of credit/payment whichever occurs first 10%

(20% if no valid PAN)

196D Income of FIIs from securities At the time of credit/payment whichever occurs first 20%

(20% if no valid PAN)

When filing your taxes ensuring all the relevant data from all the required forms, such as Form 16A, is vital. So, enlist the aid of the tax experts at H&R Block India for accurate and efficient filing of your taxes.

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