Form 16 Explained: TDS on Salary and How to File With It

Under Section 192, your employer must deduct tax from your salary before paying it. This isn't a separate tax — it's income tax collected in advance, month by month.

The mechanism is the average rate method: your employer estimates your total income and tax liability for the year, divides the tax by the income to get an average rate, and applies that rate to each month's salary. Because the estimate is revised as the year progresses, your monthly deduction typically rises through the year as cumulative income climbs — which is normal, not an error.

You can influence the estimate. By declaring your intended investments and rent through Form 12BB, you get a lower deduction from the start. You can also report income from a previous employer and any eligible house property loss, so the year's tax is estimated accurately instead of over-deducted.

One catch: the employer reduces TDS on the strength of your declaration, but will recompute later if you don't submit documentary proof — most companies set a proof deadline between mid-January and mid-February. Declare, then actually submit the receipts.

If you're on the new regime (the default), Form 12BB is largely redundant since most deductions don't apply — your employer mainly needs your regime choice. The exception worth using is 80CCD(2), the employer's NPS contribution, which is claimable under both regimes. See our guides to the new vs old regime and deductions beyond 80C.

Form 16 is the TDS certificate issued under Section 203, certifying the salary paid and the tax deducted under Section 192 during the financial year. It has two parts, and the difference matters.

Generated and downloaded by your employer from the TRACES portal (the government's TDS system), Part A carries a unique TRACES certificate number and shows employer and employee details, PAN and TAN, and the quarterly summary of TDS deducted and deposited.

Because it comes from TRACES, Part A is the authoritative, government-verified portion. Your employer can't fabricate it — and, importantly, can't even generate it until all four quarterly Form 24Q returns for the year have been filed and processed.

Part B is an annexure prepared by your employer, setting out the actual arithmetic:

A quick tell: a new-regime Part B is short — the ₹75,000 standard deduction and little else. An old-regime Part B itemises HRA, 80C, 80D, and the rest.

Employers must issue Form 16 by 15 June following the end of the financial year, under Rule 31(3) of the Income-tax Rules. For FY 2025-26, that was 15 June 2026.

The date isn't arbitrary — it follows a chain: the Q4 Form 24Q is due 31 May, Part A can only be generated from TRACES after that is processed, and employers get roughly a fortnight to issue. For employers: late issue attracts ₹100 per day, per certificate, under Section 272A(2)(g) — which multiplies fast across a workforce. And if your Q4 24Q is unfiled or showing defaults on TRACES, you physically cannot generate Part A, so the deadline is already at risk.

The figures in Form 16 should match Form 26AS and the Annual Information Statement. If they don't — for instance your employer deducted tax but deposited it late or against the wrong PAN — the mismatch will surface as a processing issue or a reduced refund.

Critically, TDS credit is claimed from Form 26AS, not from AIS. Check both before filing, and take up any discrepancy with your employer while it can still be corrected. See our guide to Form 26AS vs AIS.

This is the most common reason salaried people end up with an unexpected tax bill.

If you change jobs mid-year, you'll receive a separate Form 16 from each employer who deducted TDS. The problem is that unless you tell them otherwise, each employer applies the basic exemption and deductions separately, as if they were your only employer. The result is systematic under-deduction across the year — and a large balance payable when you file.

The fix: report your previous employer's salary to your new employer using Form 12B when you join. Then TDS is computed on your combined salary, and there's no shortfall.

If you didn't: combine the salary from all employers in the salary schedule of your return, compute the correct tax, and pay the balance as self-assessment tax before filing. Don't simply add up the Form 16s and assume the tax is settled.

Easy to confuse, simple to separate:

A freelancer with professional receipts gets Form 16A, not Form 16 — see our guide to ITR for freelancers.

1. Take gross salary and Section 10 exemptions from Part B into the salary schedule. 2. Carry across the standard deduction and Chapter VI-A deductions. 3. Take TDS from Part A, and confirm it against Form 26AS. 4. Add any income Form 16 doesn't cover — bank interest, capital gains, rental income, freelance receipts. Form 16 shows salary only; the rest is your responsibility. 5. Check whether the regime in Part B is the one you actually want. You can still choose differently when filing, subject to the applicable rules.

FY 2025-26 was the last full year under the Income-tax Act, 1961. Form 16 for FY 2025-26 (AY 2026-27) is issued under Section 203 of the 1961 Act as usual. From 1 April 2026, salary payments fall under the Income Tax Act, 2025, and the certificate is being renumbered under the new framework — the substance is unchanged. Confirm the current form designation with your payroll provider for FY 2026-27 onwards.

Forms, deadlines, and section numbering change — and the Act itself has been replaced from April 2026. Treat this as a current-position guide for FY 2025-26 and confirm the applicable requirements before relying on them.

Form 16 is your salary income and tax deduction in one certificate: Part A is the TRACES-generated, government-verified TDS summary, and Part B is your employer's detailed computation. Expect it by 15 June, check it line by line against Form 26AS, and remember it covers salary alone — every other income stream is still yours to report. If you changed jobs, combine the certificates carefully and settle any shortfall before you file, rather than discovering it as a demand later.

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1. When should I receive Form 16? By 15 June following the financial year, under Rule 31(3). For FY 2025-26, the deadline was 15 June 2026. Employers who issue late face ₹100 per day per certificate under Section 272A(2)(g).

2. What is the difference between Part A and Part B of Form 16? Part A is the TRACES-generated TDS summary with a unique certificate number — the government-verified portion showing quarterly tax deducted and deposited. Part B is the employer-prepared annexure with the detailed salary breakup, exemptions, deductions, and tax computation.

3. Can I file my ITR without Form 16? Yes. If no TDS was deducted, your employer may not issue one. You can file using your salary slips together with Form 26AS and AIS. If your employer deducted tax but didn't issue the certificate, claim the credit from Form 26AS.

4. I changed jobs this year. How many Form 16s will I get? One from each employer who deducted TDS. Combine them all when filing. If you didn't submit Form 12B to your new employer, each will have applied exemptions separately, so expect a shortfall to pay as self-assessment tax.

5. What is the difference between Form 16 and Form 16A? Form 16 certifies TDS on salary and is issued annually. Form 16A certifies TDS on non-salary payments — bank interest, professional fees, rent, commission — and is issued quarterly by the deductor.

6. Can employees download Form 16 from TRACES? No. Only employers can download it from TRACES. Employees receive it from their employer or payroll portal and can verify the certificate number on TRACES.

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