Form 16 Explained: The Salary TDS Certificate Guide

Form 16 is the certificate an employer issues to each employee showing salary paid and tax deducted at source during the year. For most salaried Indians it is the starting document for filing the income tax return, and for employers it is the final output of a year of TDS on salary. With the Income-tax Act, 2025 taking effect from 1 April 2026, the certificate continues under a new numbering (the familiar name "Form 16" remains in everyday use, and the form number for tax year 2026-27 onwards should be checked on the portal). This guide explains each part of the salary TDS certificate, the deadline, how to handle multiple employers, and the errors that cause mismatches.

What the Certificate Is and Who Gets It

• Issued by every employer who deducted TDS on salary, to each employee from whose salary tax was deducted.
• Many employers also issue it to employees with no TDS, as a statement of salary; this is good practice.
• Due by 15 June after the end of the tax year.
• Has two parts: Part A (generated from the TRACES portal) and Part B (prepared by the employer from payroll).

Part A: TDS Deducted and Deposited

Part A is downloaded by the employer from TRACES after the quarterly TDS statements for salary have been filed and processed. It contains:

Item	What to check
Employer name, address, TAN and PAN	Matches registration
Employee name and PAN	Exact PAN; a wrong PAN means the credit goes to someone else
Period of employment	Joining and exit dates within the year
Quarter-wise summary of salary paid and TDS deducted	Matches the four quarterly statements
Challan details for tax deposited	Each month's deposit is mapped
Certificate number	Unique per employee per year

Because Part A comes from TRACES, it reflects what you reported, not what you intended. Any error in a quarterly statement shows up here and in the employee's annual tax statement.

Part B: Salary Details and Tax Computation

Part B is an annexure showing the full computation. Typical lines:

1. Gross salary, split into salary as per provisions, value of perquisites (with the perquisite statement, formerly Form 12BA, where applicable) and profits in lieu of salary.
2. Exemptions (HRA, LTA, gratuity, leave encashment), as applicable to the regime.
3. Standard deduction and professional tax (old regime only for PT).
4. Income chargeable under the head salaries.
5. Other income reported by the employee (house property loss, interest).
6. Deductions declared and verified (old regime) or permitted (new regime, such as employer NPS).
7. Total taxable income.
8. Tax on total income, rebate, surcharge, cess.
9. Relief for arrears, if claimed.
10. Net tax payable and TDS deducted.
11. The regime under which TDS was computed.

Worked Example: Reading Part B

Employee on the new regime, full year with one employer.

Line	₹
Gross salary	18,00,000
Less: exemptions	0
Less: standard deduction	75,000
Income under salaries	17,25,000
Deductions	0
Total taxable income	17,25,000
Tax on total income	1,45,000
Cess at 4%	5,800
Total tax	1,50,800
TDS deducted	1,50,800
Balance	0

Tax workings: ₹20,000 (4 to 8 lakh at 5%) + ₹40,000 (8 to 12 lakh at 10%) + ₹60,000 (12 to 16 lakh at 15%) + ₹25,000 (20% of ₹1,25,000) = ₹1,45,000. For how this figure was spread month by month, see how to calculate TDS on salary.

Employees With More Than One Employer

An employee who changed jobs during the year receives a certificate from each employer. Two situations arise:

Previous income declared to the new employer

If the employee gave the new employer details of salary and TDS from the previous job (using the prescribed declaration, formerly Form 12B), the new employer computes TDS on combined income and shows the previous salary in Part B. Tax is usually correct overall.

Previous income not declared

Each employer computes TDS as if its salary were the only income, applying the lower slabs and the standard deduction separately. Combined TDS is then usually short, and the employee pays the balance as self-assessment tax when filing. Encourage joiners to declare previous income.

Example

Salary of ₹9,00,000 from each of two employers in the same year, new regime, no declaration. Each employer sees taxable income of ₹8,25,000, within the rebate, and deducts nothing. Combined taxable income is ₹18,00,000 minus one standard deduction of ₹75,000 = ₹17,25,000, with tax of ₹1,50,800 including cess. The employee must pay that at filing, plus interest for any shortfall in advance tax.

How Employees Use the Certificate

• Fill salary details in the income tax return, checking against Part B.
• Match TDS in Part A with the annual tax statement on the e-filing portal.
• Claim deductions not submitted to the employer (old regime) directly in the return, keeping proofs.
• Choose the regime at filing; it can differ from what was declared to the employer, if the employee has no business income.
• Use it as income proof for loans and visas.

Employer Process for Issuing Certificates

1. File the Q4 salary TDS statement by 31 May, with the full-year salary annexure.
2. Wait for TRACES to process the statement; resolve any defaults.
3. Bulk-download Part A from TRACES.
4. Generate Part B from payroll, matching totals with the Q4 annexure.
5. Merge, digitally sign and distribute by 15 June.
6. For employees who left during the year, send to their personal email or make available through an alumni portal.

Investment proofs collected during the year feed Part B; see our guide to investment declaration and proof submission.

Common Errors and How to Avoid Them

Error	Consequence	Prevention
Wrong PAN	TDS credit missing for the employee	Verify PAN at onboarding
Part B total differs from Q4 annexure	Mismatch notices and return processing issues	Generate both from the same payroll data
Regime shown incorrectly	Employee confusion; possible notices	Store regime declaration per employee per year
Exempt allowances shown without proofs	Disallowance in assessment	Verify proofs before year-end
Perquisites omitted	Short deduction by employer	Track loans, cars, ESOPs through the year
Late issue	Late fee per day of delay as prescribed	Start the process in May

Salary Certificate vs Annual Tax Statement vs Payslips

Document	Source	What it proves	When to use
Salary TDS certificate (formerly Form 16)	Employer and TRACES	Salary paid, exemptions, deductions, TDS	Return filing, loans, visas
Annual tax statement on the e-filing portal	Income tax department	TDS credited against your PAN from all deductors, plus other reported transactions	Verifying TDS credits before filing
Payslips	Employer	Monthly earnings and deductions	Monthly checks, loan applications, cross-checking Part B

If the three do not agree, the annual tax statement governs which TDS credit the tax department will allow, so mismatches must be fixed at the source: the employer's quarterly TDS statement.

Employees With No TDS

Since the new regime makes salary up to ₹12.75 lakh effectively tax-free for residents with no other income, a large share of employees in many companies have no TDS at all. Strictly, the certificate is required where tax was deducted. Even so, issuing a Part B style salary statement to these employees is good practice: they still need to file returns in many cases (for example, if they have other income, foreign assets or high-value transactions), and lenders still ask for salary proof. Generating it from the same payroll data costs little and saves employees a trip to HR in July.

What to Do If the Certificate Has an Error

1. Employee: compare Part A and Part B with payslips and the annual tax statement; report specific discrepancies to payroll in writing.
2. Employer: if Part A is wrong (for example, wrong PAN or missing quarter), file a correction statement for the relevant quarter on TRACES.
3. Employer: once processed, download the revised Part A.
4. Employer: if Part B is wrong (for example, an exemption omitted), issue a revised Part B with the correct computation; if TDS was short, the employer may also need to deposit the difference with interest.
5. Employee: if the return has already been filed, file a revised return once the credit appears correctly.

Corrections take weeks, so the best fix is prevention: verify PANs at onboarding and reconcile each quarter's statement with payroll before filing.

Certificates in Fininvo Payroll

Fininvo Payroll includes Form 16 generation and TDS reports, prepared from the same processed runs that drove monthly TDS. See India payroll and reports.

Frequently Asked Questions

When will I get Form 16?

Employers must issue the salary TDS certificate by 15 June after the end of the tax year.

What is the difference between Part A and Part B?

Part A, from TRACES, shows TDS deducted and deposited quarter by quarter. Part B, from the employer, shows the salary breakup, exemptions, deductions and tax computation.

Can I file my return without Form 16?

Yes. Use payslips and the annual tax statement on the e-filing portal. The certificate makes it easier but is not mandatory for filing.

Has Form 16 changed under the Income-tax Act, 2025?

The concept of a salary TDS certificate continues, but forms have been renumbered under the new Act and rules. Use the form currently notified for the tax year.

Is this tax advice?

No. This is general information. Check current forms and rules on the income tax portal and consult a professional for specific cases.