TDS Form 16 Part B will be issued by the persons responsible for deducting tax at source. When TDS is deducted it’s important to issue TDS certificate so that the payee knows how much tax he has paid. Many institutions and individuals may not issue TDS certificates, unless you ask for the same. Therefore, it’s important that you ask for the TDS certificate, so you know exactly how much tax has already been paid and deposited with the government.
Let’s say you have a fixed deposit that gives you an interest of Rs 11,000. Now, the bank would deduct Rs 1100 on this amount, so your tax deducted at source would be Rs 1100. It’s necessary for the bank to issue a TDS certificate for Rs 1100. It informs you that tax has been deducted from your fixed deposit and the same has been paid to the government.
Now, if your income is not more then Rs 2.5 lakh, you can get back the Rs 1100 deducted, when you file your income tax returns.
Of course, nowadays it is possible to view how much TDS has been deducted online. However, there maybe many individuals who are not net savvy. For them getting a TDS certificate and calculating their own tax liability would be better.
If you do not want TDS to be deducted and your income is below the threshold limit of Rs 2 lakhs, you can submit form 15G or 15H, so the bank/companies would not deduct TDS.
The government has from this budget onwards made it compulsory for deduction of TDS even on real estate transactions. This means that if you sell a property in excess of Rs 50 lakhs you now have to pay TDS.
In any case remember that collecting a TDS certificate is important and giving one, if your the deductor is also important.