Employers are mandated by law to issue Form 16 to their employees under section 203 of the Income Tax Act, 1961 as a proof of tax deducted at source (TDS) from salary. Form 16 includes two parts, i.e., Part A and Part B. While these two parts make up for the same document, the differences between 16A and 16B can be found in the information that is indicated.
Some of the components of Part A include –
Name and address of employer along with the latter’s PAN and TAN. Secondly, the employee’s PAN is mentioned. The other details include a summary of the amount paid and tax deducted at source for an employee, period of employment, assessment year, date of tax deduction, its deposit with the Government, and TDS payment number, among others.
On the other hand, the details mentioned in Part B consolidates other aspects of income and tax obligations. This part includes – a detailed structure of the salary, various allowances, such as conveyance, children’s education, etc., particulars on deductions, gross income, net taxable salary, etc.
Essentially, Form 16 serves as an income proof and also as an income tax liability statement. When applying for advances or credit instruments like the Bajaj Finserv RBL Bank SuperCard, this certificate can prove crucial in establishing income eligibility and determining the credit limit of the applicant, among other uses