Thursday, September 1, 2011

Form16A.....find the devil in the fine print !

When every year you calculate the income tax to be paid, you do take into consideration the interest income you have earned on your bank fixed deposits. Form 16A which is also called the TDS certificate is issued by the bank after the end of a financial year. The form mentions the interest paid/credited for the four quarters, and the TDS ( tax deducted at source) amounts for the four quarters. This information is an important input for your arriving at the total tax to be paid and balance tax to be paid after considering the TDS amounts.

Very few people pay attention to the other details mentioned ( or to be mentioned but not actually mentioned) in the form 16A. How would you know that the bank has deposited the TDS cut from your interest in the Govt. account? For this, you must check whether transfer challan/voucher number is given for every TDS amount mentioned in form 16A. The bank is supposed to file a quarterly TDS return to the Income Tax department for all the TDS amounts cut from each of its customers . These returns are now filed electronically. The returns are uploaded to NSDL/TIN . When the uploading is successful, TIN issues a receipt . So, form 16A which your bank has given you must contain the receipt number. This receipt number is an 8-digit alphabetical combination. If this number is not given in your form 16A, you must demand from the bank that they mention the receipt number. Receipt number is the only proof that the bank has filed the TDS returns. If they have not filed the returns, then you do not get tax credit in form 26AS. The income tax department goes by whatever is mentioned in form 26AS.

Another important thing to be checked is whether the bank has mentioned your PAN number in the form 16A. If they have mentioned it in ink while the rest of the details are printed, chances are that the bank did not mention your PAN number in their TDS returns. Without PAN number being there in the bank's TDS returns, the income tax department can not link the TDS amounts to your PAN number; so you do not get the tax credit for the TDS cut and deposited. Such TDS amounts will not appear in your form 26AS. You will soon get a letter from the income tax department raising questions on the TDS amounts you have mentioned in your IT returns.

Do not have blind faith in your bank. While their intentions may not necessarily be suspect, the bank employees' well-known negligence might land you in problems. So, go through your form 16A before you file your IT returns and ensure that mistakes in the form are corrected well in time.

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