Income Tax: What are Form 16, AIS and 26AS? An explainer
Financial year 2024-25 has ended long ago and taxpayers are busy arranging necessary documents to be able to start the process of filing of income tax (I-T) return. When salaried taxpayers approach their chartered accountant for filing their income tax return, s/he typically asks him for form-16 which is a TDS certificate issued by the employer to employee.
In other words, it is a statement that shows tax deducted by the employer on behalf of the employee.
Aside from form 16, other documents which you need at the time of filing of income tax return are form 26AS which is a tax credit statement, and AIS which is a comprehensive view of information for a taxpayer displayed in form 26AS. Let us understand more about these documents in detail.
Form 16: It is a TDS certificate issued by an employer to an employee. It is proof that the employer deposited the tax with the tax authorities.
Form 26AS: It is a consolidated Annual Information Statement for a particular Financial Year (FY). It contains the details of Tax Deducted at Source (TDS), Tax Collected at Source (TCS), advance tax / self-assessment tax / regular assessment tax deposited, refund received during a financial year (if any),
Details of any specified financial transactions (SFT), details of tax deducted on sale of immovable property under section 194 IA (in case of seller of such property), TDS defaults (if any), information relating to demand and refund and information relating to pending and completed proceedings.
Annual Information Statement: AIS is a comprehensive view of information for a taxpayer displayed in Form 26AS. Taxpayers can provide feedback on information displayed in AIS. It shows both reported value and modified value (i.e. value after considering taxpayer feedback) under each section (i.e. TDS, SFT, Other information).
AIS meets these purposes:
1. Shows complete information to the taxpayer with a provision to capture online feedback
2. Encourages voluntary compliance and enables prefilling of return
For all personal finance updates, visit here.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
News18
7 hours ago
- News18
Received Form 16/16A? Here's What You Must Do Before Filing ITR 2025
Last Updated: Incorrect TDS reporting can lead to tax mismatches, refund delays, or notices from the Income Tax Department. ITR Filing 2025: The Income Tax Return (ITR) filing season is underway following the reinstatement of form utilities. Salaried taxpayers are advised to await their Form 16 or Form 16A, the Tax Deducted at Source (TDS) certificates that enable them to calculate their tax liabilities for the financial year. These are issued by employers. Understanding Form 16 and Form 16A is crucial for both deductors and taxpayers. These forms serve as vital proof of TDS and are essential for accurate and efficient ITR filing. Follow these tips: Collect a Valid Form 16/16A: Obtain Form 16 or 16A from your employer or deductor. Ensure it is generated from TRACES; no substitutes are acceptable. Verify TDS Details: Cross-check the TDS information in Form 26AS or the Annual Information Statement (AIS) against your Form 16/16A to ensure accuracy. Avoid ITR Filing Errors: Accurate forms and verified data prevent notices from the Income Tax Department and ensure timely refunds. 'E- Filing Made Easy"Form 16/16A – The Starting Point of Your ITR Journey 🔷Deductors: Ensure Form 16/16A is generated only from TRACES for authenticity.🔷Taxpayers: Always cross-check TDS with your Form 26AS/AIS before filing. Correct forms help avoid mismatches and build… — Income Tax India (@IncomeTaxIndia) June 6, 2025 Match PAN Count: Verify the number of reported PANs against the previous year's data. File corrections for any discrepancies. File Correct and Complete Reports: Accurate reporting is crucial for deductees' tax credits. Errors can delay or impact their refunds or liabilities. Use TRACES Website Only: Generate Form 16/16A exclusively from the TRACES portal. This ensures accurate reflection of deductee details in their ITR. Incorrect TDS reporting can lead to tax mismatches, refund delays, or notices from the Income Tax Department. Adhering to the official TRACES process, whether deducting or receiving TDS, ensures transparency and streamlines the e-filing process.
&w=3840&q=100)
Business Standard
a day ago
- Business Standard
Thinking of withdrawing your PF? A surprise 30% tax may hit you
Are you tempted to withdraw your Provident Fund (PF) savings after quitting your job? Doing that without completing five years of continuous service could dent your savings, with up to 30 per cent of the amount going in taxes. Legal experts and tax professionals say that hasty PF withdrawals defeat the purpose of long-term retirement savings and have hefty tax implications. 'Withdrawing your PF before five years of continuous service is treated as a taxable event,' said Vishal Gehrana, partner designate at Karanjawala & Co. and advocate-on-record at the Supreme Court. 'Not only is the entire amount taxable as per your slab, but if you haven't submitted your PAN, TDS (tax deducted at source) is deducted at 30 per cent.' What exactly gets taxed? Both employee and employer contributions, and the interest earned on them, become taxable income under Section 192A of the Income-tax Act, 1961. The Employees' Provident Fund Organisation (EPFO) deducts TDS if the withdrawal is more than Rs 50,000, said Gehrana. Kunal Savani, partner at Cyril Amarchand Mangaldas, said: 'The employer's share along with interest becomes taxable as profits in lieu of salary. While the employee's own contribution may be tax-free, interest on it could still be taxable, especially if thresholds are crossed.' Are there exceptions? Yes. Tax is not applicable if the withdrawal is due to ill health, business closure, or reasons beyond the employee's control. In such cases, the law provides relief. Also, once an individual completes five years of continuous service or withdraws PF after retirement, the entire amount is tax-exempt under Section 10(12) of the Income-tax Act. Mistakes to avoid Withdrawing PF instead of transferring it when switching jobs Not maintaining five years of cumulative service Failing to submit PAN, leading to higher TDS Assuming Form 15G/H always prevents TDS (they work only if income is below the taxable limit) Treat PF as long-term asset 'Instead of withdrawing PF early, transferring the account to the new employer preserves service continuity and tax benefits,' said Gehrana. He recommended maintaining documents to support your case in the event of a tax notice. A recent X post by tax professional Sujit Bangar summed it up aptly: 'Withdrawing PF after resigning job? If you've not completed 5 years, the entire amount is taxable. 30 per cent TDS. Don't act in a hurry.' Transfer your PF account when changing jobs to maintain service continuity and qualifying for tax-free withdrawals after five years. Avoid full withdrawals unless absolutely necessary. Instead, opt for partial advances allowed for medical, housing, or education needs, which are typically not taxable. Time your withdrawal in a financial year when your total income is below the taxable limit to reduce or eliminate tax burden. Submit Form 15G or 15H, if eligible, to avoid TDS on withdrawals below the tax threshold.
Mint
a day ago
- Mint
TDS on rent: Why the tax department needs to fix its Traces portal
Certain payments made by individuals attract tax deduction at source (TDS), but many are unaware of it. For instance, 2% TDS applies to rent exceeding ₹50,000 per month, 1% on property purchases above ₹50 lakh, and a similar rule applies to high-value freelance or contract payments. The income tax department has been tracking individuals who failed to comply with these TDS rules. Taxpayers who claimed HRA exemption while paying rent above ₹50,000 received SMS and email alerts from the I-T department. The penalty for non-compliance is steep. Tenants who did not deduct TDS on rent under 194-IB can avoid these penalties by proving that the landlord has paid tax on the rental income. This is done by filing Form 26A, a certificate from a chartered accountant (CA) confirming that the tax has been paid. This seemingly simple solution is, however, fraught with technical hurdles. Also Read: Details on rent, home loan, TDS: ITR forms seek more disclosures this year Portal problems The Traces (TDS Reconciliation Analysis and Correction Enabling System) or e-filing portal, which is needed to generate Form 26A, does not allow individual deductors to initiate the process unless the user has a tax deduction and collection account number or TAN number, tax experts told Mint. The tax department's Traces portal is an online platform that helps both deductors and taxpayers view, reconcile, and manage their TDS transactions for filing returns and claiming refunds. To be sure, individuals paying rent to resident landlords aren't required to obtain a TAN to deduct TDS. Even if someone goes through the trouble of getting a TAN, which is an entirely online process and typically takes 2-4 days, the problem doesn't end there. Chartered accountant Ashish Karundia said even when a TAN is obtained, the portal does not have Form 26QC, which is required to fill in details regarding this matter when logged in to the Traces portal. As per Section 201, defaulting tenants can show the landlord's ITR to prove that tax on rental income is paid. To do this, they should initiate Form 26A on the Traces website. The tenant should log in to the Traces platform as a deductor. He needs to initiate Form 26A, add details of non-deduction and assign the Form 26A to a CA for verification through the TAN login on e-filing portal. Also Read: TDS on rent and contract work: How small taxpayers can avoid penalties The process may seem easy, but it is an uphill task due to technical challenges. Logging into Traces through PAN will not work as Form 26A can only be initiated through 'deductor' Traces log-in, which needs a TAN, said Karundia. Deductor login is for those who deduct and deposit the TDS and taxpayer login is for the deductee on whose behalf tax is being paid (landlord in this case). Getting TAN takes 2-4 days to be issued, but even if the tenant gets a TAN number and successfully logs in to the Traces portal as a deductor, a second layer of challenge crops up, said Karundia. 'After logging in, the tenant has to initiate Form 26A and choose the type of form he's filing–26QB for TDS on property purchase, 26QC for TDS on rent or 26QD for TDS on payment to contractors. It is mandatory to choose one of these options before entering other transaction details," he explained. The Traces portal for deductors does not have this option as all three TDS deductions–property, rent and contractual services–are PAN-based and do not require a TAN in the first place. 'Even if the tenant gets a TAN and logs in to the Traces deductor portal, he will still not be able to initiate Form 26A due to unavailability of Form 26QC," said Karundia. Also Read: Relying on rental income in retirement? Take these steps to protect yourself. What needs to change Karundia said Traces should allow users to log in using PAN details instead of TAN, and allow Form 26A initiation for Forms 26QB, 26QC, and 26QD. Once this is initiated, the taxpayer can assign it to a CA through the e-portal. After the CA certifies that the recipient has paid the due tax, they can sign it and get it processed. "Currently, taxpayers can't assign Form 26A to a CA through their taxpayer (PAN) ID in Traces. So, there is a need to extend the ability of assignment of Form 26A to a CA....," said Mayank Mohanka, founder of TaxAaram India and a partner at S.M. Mohanka & Associates. For now, CAs like Karundia are maintaining Form 26A manually. 'Right now there is no other option. The other option is to have the form along with CA-certified Annexure A in physical form with the tenant, " Karundia said. Bhawna Kakkar, chartered accountant and founder, Kakkar & Company, Chartered Accountants, said she is also maintaining the Form 26A manually. 'Due to this technical limitation, such tenants cannot initiate Form 26A filing through Traces. The alternative approach is to manually submit the CA-certified Form 26A along with supporting documents (landlord's ITR, rent income proof, tax paid details) either in response to a notice received from the department or directly to the jurisdictional assessing officer." 'The tenant would still be required to pay interest under section 201(1A) at 1% per month from the month TDS was deductible till the month the landlord filed the ITR. Once the AO is satisfied that the conditions are met, the tenant is not treated as in default for the TDS, and no demand will be raised for the tax amount, only the interest may be payable," said Kakkar. The government has to necessarily address this issues faced by taxpayesr at the earliest so that the ordinary citizens who are ignorant of the TDS provisions can take necessary steps to avoid ending up being 'assessee in default', said Prakash Hegde, a Bengaluru-based CA. "Until the government makes these updates to form 26A, it is going to be big challenge for the defaulters, most of whom are ignorant of the provisions," said Hegde. Kakkar said, 'If procedures are not in sync with the law, the law should be applied instead of procedures, and the law nowhere restricts form 26QB/26QC type payments for the benefit under proviso to section 201. So, the only option left is to proceed manually and provide a manual CA certificate. We actually have given one such certificate."
