The Form 16A is a certificate to endorse the amount of Tax Deducted at Source (TDS) for individuals whose earnings are generated from non-salary incomes. The concept of Tax deducted at source (TDS) and Tax collection at source (TCS) are specifically for targeting the revenue collection at the very source where the income is generated. This refers to revenue generation as and when an income is earned and the indirect but surer way of collecting tax enabling greater reach and wider base for tax collection. This also works out as a convenient way to pay tax for earning the income as well. The income providers are conferred with the responsibility of deducting taxes at the specified rates before the payments are made and the deducted sums are to be deposited to the Central Government as TDS. The tax paid by the deductor is credited to the individuals who receive the income.
Form 16A indicates the amount of Tax deducted and the TDS payments that are deposited with Income Tax Department of India and the nature of payments. Non-salary incomes include fees paid as professional fees, rents, bank interest payments and so on. According to the Income Tax Act, 1961 of the Government of India, TDS has to be deducted on all non-salary payments and if the annual taxable income of the assessee exceeds Rs.30000 during the financial year, unless otherwise exempted.