Form 16A and Form 16B are TDS certificates under the Income Tax Act, 196, serving distinct purposes. Form 16A applies to non-salary payments like interest, rent, commission, or professional fees and is issued quarterly by the payer to the recipient. In contrast, the Form 16B is specifically for the sale of immovable property valued at ₹50 lakh or more, where the buyer deducts TDS and issues the certificate to the seller after filing Form 26QB. Both forms serve as proof of TDS deduction and are essential for claiming tax credit in the recipient’s income tax return. They must be accurately filed, digitally signed, and matched with Form 26AS for seamless income tax compliance.
In this guide, we will understand the meaning and the authority issuing and receiving Form 16A and Form 16B. We will also understand the content of both forms and the key differences between them.
What is Form 16A?
Form 16A is a certificate of Tax Deducted at Source (TDS) issued under Section 203 of the Income Tax Act, 1961. It applies to non-salary payments. Whenever TDS is deducted on income other than salary, such as interest, rent, commission, professional fees, etc., the deductor is required to issue Form 16A to the payee.
Form 16A is an official proof that:
- TDS has been correctly deducted.
- The deducted tax has been deposited with the government.
- The payment made is subject to TDS provisions.
Who Issues Form 16A?
Form 16A is issued by any deductor (payer) who has made a payment to a deductee (recipient) after deducting TDS.
Who Receives Form 16A?
Any person who receives a non-salary income subject to TDS is entitled to receive Form 16A. It includes:
- Freelancers and independent consultants
- Professionals such as doctors, lawyers, and architects
- Landlords renting out property above the specified threshold
- Contractors
- Individuals earning substantial interest on FDs or debentures
Contents of Form 16A
Form 16A is a detailed document and includes the following:
- Name and address of the deductor and the deductee
- PAN and TAN of the deductor
- PAN of the deductee
- Nature of payment (interest, rent, fees, etc.)
- The section under which TDS is deducted
- Total amount paid or credited
- Date of payment or credit
- Rate and amount of TDS deducted
- Challan details:
- BSR code of the bank branch
- Challan serial number
- Date of TDS deposit
- Verification by the deductor
- TRACES watermark (mandatory for authenticity)
What if Form 16A is Not Issued or is Wrong?
- Deductor may be liable to a penalty of ₹100 per day under Section 272A(2)(g) of the Income Tax Act, 1961.
- You might not get TDS credit while filing ITR if:
- The PAN was wrong or unlinked to Aadhaar.
- The TDS return was not filed or was incorrectly filed.
- The deductor failed to download Form 16A from TRACES.
What is Form 16B?
Form 16B is a certificate of Tax Deducted at Source (TDS) issued under Section 203 of the Income Tax Act, 1961. It is specifically related to transactions involving the sale of immovable property, where the buyer is required to deduct TDS from the amount payable to the seller. The form serves as proof that the buyer has deducted TDS as required under Section 194-IA of the Income Tax Act, 1961, and deposited the amount with the central government.
Applicability of Form 16B
Form 16B becomes applicable when:
- The property being sold is not agricultural land.
- The sale consideration of the immovable property is ₹50 lakh or more.
- The transaction involves a resident seller (if the seller is a non-resident, the provisions of Section 195 of the Income Tax Act,1961 will apply, and Form 16B will not be used).
- The buyer is an individual or a Hindu Undivided Family (HUF) not liable to tax audit.
Who Issues Form 16B?
Form 16B is issued by the buyer of the property after deducting TDS under Section 194-IA of the Income Tax Act, 1961, and depositing the same through Form 26QB. It is the buyer’s responsibility to provide the seller with this certificate as part of the compliance process.
Who Receives Form 16B?
The seller of the property receives Form 16B from the buyer. It is an essential document for the seller, who can use it to:
- Claim TDS credit in their income tax return.
- Maintain proper tax records in case of scrutiny or assessment.
- Verify the deposit of TDS against their PAN in Form 26AS.
Details Included in Form 16B
Form 16B contains the following information:
- PAN and the names of the buyer and seller
- Full address of both parties
- Property details and address
- Total consideration amount
- TDS amount deducted and deposited
- Date of deduction and payment
- Challan identification number (CIN)
- Acknowledgment number of Form 26QB
- Digital signature of the deductor (buyer)
Consequences of Non-Issuance of Form 16B
Failure to issue Form 16B can lead to various consequences for the buyer, such as:
- Interest under Section 201(1A) of the Income Tax Act, 1961:
- 1% per month for non-dedication of TDS
- 5% per month for non-deposit after deduction
- Penalty under Section 271H of the Income Tax Act, 1961: ₹10,000 to ₹1 lakh
- The seller may be unable to claim TDS credit, which may result in increased tax liability or double taxation
Difference between Form 16A and 16B
| Particulars | Form 16A | Form 16B |
| Purpose | Form 16A is a TDS certificate issued for tax deducted on income other than salaries, such as professional fees, rent, interest, or commission.
Commonly used by consultants, freelancers, landlords, contractors, and service providers to claim TDS credit. |
Form 16B is a TDS certificate issued specifically when tax is deducted on the sale of immovable property under Section 194-IA of the Income Tax Act, 1961.
Used specifically in real estate transactions between individuals or entities when the consideration exceeds the threshold limit. |
| Income Covered | It covers a wide range of income types, excluding salary and sale of property (e.g., fees, rent, interest, brokerage). | It covers only income derived from the sale of immovable property (land or building, excluding agricultural land). |
| Who Deducts TDS | The person or entity making payment of professional fees, commission, rent, etc., deducts TDS and issues Form 16A. | The buyer of the immovable property deducts TDS from the consideration payable to the seller. |
| Who Receives It | The individual or entity who receives the non-salary income (deductee) receives Form 16A from the deductor. | The seller of the immovable property receives Form 16B from the buyer, who has deducted the TDS. |
| Relevant Filing Form | The deductor files quarterly TDS returns using Form 26Q for non-salary payments. | The buyer files a one-time Form 26QB to report the TDS deducted on property transactions. |
| Applicability of PAN | The PAN of both the deductor and the deductee must be correctly mentioned to ensure proper credit and compliance. | The PAN of both buyer and seller must be accurately reported in Form 26QB and Form 16B to reflect the TDS credit properly. |
| Threshold Limit | The threshold limit varies depending on the nature of the payment, e.g., ₹30,000 for professional fees, ₹10,000 for interest, etc. | TDS becomes applicable only if the property’s sale value is ₹50 lakh or more. |
| Applicable Rate of TDS | The TDS rate varies based on the nature of payment (e.g., 10% for professional fees, 1% for rent above threshold, etc.). | The applicable TDS rate under Section 194-IA is fixed at 1% of the total sale consideration. |
| Availability in Form 26AS | The tax deducted and reported through Form 16A is reflected in the recipient’s Form 26AS under relevant sections. | The TDS reported through Form 16B is reflected in the seller’s Form 26AS under Section 194-IA of the Income Tax Act, 1961. |
| Use in ITR Filing | Form 16A helps the deductee to claim TDS credit against their taxable income in their income tax return. | Form 16B helps the seller claim the TDS already deducted on the sale of property in their return of income. |
Conclusion
Form 16A and Form 16B play an essential role in ensuring transparency, traceability, and accountability in TDS compliance. While Form 16A supports a broad spectrum of professional and financial transactions beyond salaries, Form 16B brings structured compliance to high-value property sales. Understanding the difference between these forms is not merely a matter of technical clarity- it is a crucial step towards responsible tax practice. With correct usage, timely filing, and careful reconciliation with Form 26AS, taxpayers can avoid penalties, safeguard their TDS credits, and stay on the right side of the law.
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