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Tax filing season begins for the financial year 2024-25, and the assessment year 2025-26 has officially commenced, with salaried employees in India having received their Form 16 documentation.
There are new changes in Form 16 that have been announced in the Union Budget 2025 to improve transparency by giving a detailed explanation of compensation components, tax-exempt allowances, and deductions, as well as which salary perks are subject to taxation.
Form 16 is a TDS (Tax Deducted at Source) certificate provided by employers to salaried employees, allowing them to accurately submit their Income Tax Returns (ITR) and comply with tax requirements.
It’s also important to note that employees who have changed employment throughout the fiscal year must obtain Form 16 from each employer.
Form 16, along with its two components: Form 16A and Form 16B, are certificates issued as proof that Tax Deducted at Source (TDS) has been collected and deposited with the government.
Employers give Form 16 to salaried employees for TDS on their salaries, whereas Form 16A is for TDS on non-salary income, like interest, commission, or rent.
Form 16B is for property deals under Section 194-IA of the Income Tax Act. The buyer hands this form to the seller after taking out TDS on the sale of immovable property.
| Particulars | Form 16 | Form 16A | Form 16B |
| Issued By | Employer | Deductor (e.g., banks, companies, individuals other than the employer) | Buyer of the immovable property |
| Covers Income From | Salary | Non-salary sources such as FD interest, contractor payments, professional fees, and rent | Sale of real estate (residential/commercial land or building) |
| Issuance Frequency | Once a year | Every quarter (quarterly basis) | Per transaction (each qualifying property sale) |
| Applicable Threshold | When salary income exceeds the basic exemption limit | When non-salary income surpasses the TDS threshold set by the respective sections | If the sale consideration or stamp duty value of the property is above ₹50 lakhs |
| Purpose | Acts as proof of TDS on salary for ITR filing and tax compliance | Used to validate TDS deducted on other income types; necessary for return filing and tax credit | Confirms TDS deduction on property purchases; serves as evidence for the seller |
| TDS Rate | Based on applicable income tax slab rates | As defined under specific Income Tax Act sections (e.g., 10%, 5%, etc.) | 1% of the property value or stamp duty value, whichever is greater |
Source: Clear Tax
