What is Form 16?

Form 16 is the TDS certificate that an employer gives to an employee after the end of a financial year. It is proof that the employer has deducted tax from the employee's salary and deposited it with the government. Form 16 is issued under Section 203 of the Income Tax Act, 1961 and must be given by 15 June after the financial year ends.

Form 16 has two parts. Part A is generated from the TRACES portal and contains the employer's TAN, the employee's PAN, the quarter-wise TDS deducted and deposited, and a summary of salary payments. Part B is prepared by the employer and shows the salary breakup, exemptions such as HRA, deductions under Chapter VI-A, and the final tax computation.

Employees use Form 16 to file their income tax return and to match the TDS entries with their Form 26AS tax credit statement. Any mismatch between Form 16 and Form 26AS should be resolved before filing the return.

Worked example

An employee has an annual gross salary of ₹9,00,000. The employer deducts TDS of ₹60,000 during the year.

| Form 16 item | Value | |---|---| | Gross salary | ₹9,00,000 | | Exemptions (HRA) | ₹1,20,000 | | Deductions (80C + 80D) | ₹1,75,000 | | Taxable income | ₹6,05,000 | | TDS deducted | ₹60,000 |

Part A of Form 16 shows the ₹60,000 deposited. Part B explains how the taxable income was arrived at.

Related reading

Read the TDS on salary guide or use the tax regime calculator.