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Every year each citizen who earns money must pay taxes. There are many types of taxes on many different types of things (money earned, real estate or property owned, stocks, business, etc.). Form 16 is another part of paying taxes. There are actually two versions of Form 16 for Indian taxes.
Form 16 is in regard to salaried employees. If you make an hourly wage, this is not the form you should be filling out. If you make a salary (the same amount of money if you work 10 hours or 100 hours) than this is the form you should be filling out for your taxes. Your employer will provide you with Form 16 that will show the net income and the taxes deducted. If there are other things being taken out of your pay like Medical expenses, conveyance allowance, professional taxes or housing rent allowances, these will be shown on your Form 16 also. Your net income then is what you bring home after everything is deducted from your pay.
The second version of this is Form 16A. Like most countries where tax is applicable, tax forms can be complicated and what you pay tax on will vary. 16A is tax on other income like securities, lottery winnings, gambling winning, insurance payments, deposits, prize winnings, etc. These are all considered a form of salary even though they are often single time payments to you. Because they are considered a form of salary they fall under Form 16 but because they are often one time, they are given the subheading of 16A. You must pay taxes on this money, but it is money that is a little different from your normal salary.
All of income taxed is dependent upon your citizenship of India. If you are a citizen and work outside of the country you still have to pay tax, although in addition to the Form 16 income tax, there are other taxes you will need to pay, the most common type is still Form 16. If you are not a citizen but make money in India, you will not use the Form 16 but another form. It is dependent upon citizenship and the way you make money in the country. There is also a tax on tax, depending on how much is filed with a Form 16 so it is important if you do not understand how the tax laws work in India to find someone who is familiar with them to help you file. |
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