Form 16 is the certificate your employer issues every year showing the salary paid to you and the tax deducted from it. It arrives by 15 June, and for most salaried people it contains nearly every number the income tax return asks for. It is also where errors originate - a missed deduction, an allowance shown as taxable, a regime the payroll team applied without asking you - so reading it properly before you file is worth twenty minutes. This guide walks through both parts, explains each line, and shows what to check it against.
Part A and Part B: two documents, two jobs
Form 16 has two parts that come from different places. Both must carry the same certificate number and your employer's TAN, and Part A must be digitally signed or downloaded from TRACES to be valid.
| Part A | Part B | |
|---|---|---|
| Generated by | The income tax department's TRACES portal, from the TDS returns your employer filed each quarter | Your employer's payroll software (an "annexure" to Part A) |
| What it proves | That tax was actually deducted and deposited against your PAN - the amounts, the dates, the challan numbers | How your taxable salary was computed - gross pay, exemptions, deductions, and the tax worked out on it |
| Key fields | Employer's TAN and PAN, your PAN, period of employment, quarter-wise TDS deducted and deposited, receipt numbers of the TDS returns | Salary breakdown (Section 17(1), (2), (3)), exempt allowances under Section 10, standard deduction, Chapter VI-A deductions, taxable income, tax, rebate, cess, relief under 89 |
| Use it for | Matching TDS with Form 26AS; the "TDS" schedule of your ITR | The "Salary" schedule and the deductions schedule of your ITR |
If your employer deducted no TDS at all (common at salaries under ₹12.75 lakh in the new regime), they may not issue Form 16 - they are only obliged to when tax was deducted. You can still file using your payslips and the salary figure in the AIS.
Part B line by line
The layout below follows the standard Part B format. Numbers in brackets are the line references most payroll systems print.
1. Gross salary
- Salary as per Section 17(1) - basic, DA, HRA, all allowances, bonus, leave encashment paid during service, arrears. This is your total cash pay before anything is removed. It should match the "gross earnings" total of your twelve payslips.
- Value of perquisites under 17(2) - non-cash benefits: company car, rent-free accommodation, ESOPs exercised, employer's PF and NPS contributions above ₹7.5 lakh, interest-free loans. Detailed in Form 12BA if any exist.
- Profits in lieu of salary under 17(3) - joining bonuses, non-compete payments, retrenchment compensation. Usually nil.
2. Allowances exempt under Section 10
HRA exemption (10(13A)), leave travel concession (10(5)), gratuity (10(10)), commuted pension, leave encashment on retirement (10(10AA)) - each shown separately. In the new regime this block is almost empty: HRA and LTA exemptions are not allowed, so if you see an HRA exemption here your payroll has put you on the old regime.
3. Net salary and Section 16 deductions
Gross salary minus exemptions, then minus the standard deduction (₹75,000 new regime / ₹50,000 old), professional tax (old regime only) and entertainment allowance (government employees, old regime). The result is "Income chargeable under the head Salaries" - the single most important number on the form; it goes straight into your ITR.
4. Other income reported to the employer
If you declared interest income or a house-property loss to your employer (so TDS could be adjusted), it appears here. Anything you did not declare is absent - you still have to report it in the ITR.
5. Chapter VI-A deductions
80C (with the individual items - PF, PPF, LIC, ELSS, tuition), 80CCD(1B), 80CCD(2), 80D, 80E, 80G, 80TTA. Each shows the "gross amount" you claimed and the "deductible amount" after limits. In the new regime only 80CCD(2) should appear. If your Form 16 shows 80C deductions and you are in the new regime, or shows none and you gave proofs for the old, the regime on file is wrong.
6. Tax computation
Taxable income, tax on it, rebate under Section 87A, surcharge, cess, relief under Section 89 (for arrears), and finally "net tax payable" - which should equal the total TDS in Part A. If it does not, either you owe the difference or you are due a refund.
Part B also states, near the top, "whether opting out of taxation u/s 115BAC" - "No" means new regime, "Yes" means old. Check it; this is the single line that determines everything else on the page.
Check it against Form 26AS and the AIS before filing
Form 16 is your employer's account of events. The tax department has its own, in two places on the e-filing portal:
- Form 26AS - the tax credit statement. The TDS in Part A must appear here, quarter by quarter, under your employer's TAN. If it does not, the employer deducted the tax but did not deposit it or filed the TDS return with a wrong PAN - and you will not get credit until they fix it. Raise it with payroll immediately; you cannot claim TDS that 26AS does not show.
- AIS (Annual Information Statement) - a wider view including salary, interest from every bank, dividends, mutual fund transactions and property deals reported by third parties. The salary figure in AIS should match "Income chargeable under Salaries" in Part B, give or take exempt allowances. Interest that appears in AIS but not on your Form 16 must go in the ITR.
The department's pre-filled ITR pulls from these two, not from Form 16. When the pre-filled figure and Form 16 disagree, find out why before overriding either - a mismatch is the most common trigger for an automated notice under Section 143(1).
Two Form 16s in one year (you changed jobs)
Each employer issues a Form 16 for the months they paid you. Filing needs the combined picture, and three things go wrong:
- The standard deduction is applied twice. Each payroll deducts ₹75,000 when computing TDS. You get it once. Add the two "income chargeable under Salaries" figures, then add back one ₹75,000 - or, simpler, add the two gross salaries and deduct ₹75,000 once.
- The slabs are applied twice. Each employer taxes only their share of your salary, starting from the nil band. Your real tax is on the total, so combined TDS is almost always short, and you will owe the balance (plus interest under 234B/234C if it is large and you did not pay advance tax).
- Deductions are counted twice if you submitted the same 80C proofs to both employers.
The fix is upstream: give the new employer Form 12B with your previous salary and TDS when you join. They then compute TDS on the year's full salary and the problem disappears. If you did not, just be ready for a self-assessment tax payment at filing.
Errors to look for, and what to do about them
| What you see | What it usually means | Fix |
|---|---|---|
| Wrong regime in Part B | Payroll applied the default (new) or last year's choice | You can still choose either regime in the ITR (salaried taxpayers without business income are not bound by the TDS choice). Expect a refund or a balance payment. |
| 80C / 80D lower than what you invested | Proofs submitted late or rejected | Claim the correct amount in the ITR with your own records. Form 16 is not the ceiling. |
| HRA exemption missing (old regime) | Rent receipts or landlord PAN not provided | Compute the exemption yourself and claim it in the ITR - keep the receipts. |
| TDS in Part A not in 26AS | Employer has not deposited or misreported | Escalate to the employer; if unresolved, file a grievance on the portal. Do not claim TDS that 26AS does not show. |
| Wrong PAN or name | Data-entry error in the TDS return | Employer must file a correction statement; you cannot fix it from your side. |
| Perquisite value you do not recognise | ESOP exercise, group insurance above limits, or the ₹7.5 lakh retiral cap | Ask for Form 12BA, which itemises perquisites. |
A last practical point: keep Form 16 for at least six years. The department can reopen an assessment within that period, and it is the document that proves what your employer paid and withheld.
Type the gross salary from your Form 16 into the calculator and confirm the tax in Part B - if the numbers differ, you know where to look.
Verify your Form 16 tax →Frequently asked questions
When is Form 16 issued?
By 15 June following the financial year - so Form 16 for FY 2025-26 was due by 15 June 2026. Employers must issue it whenever they have deducted TDS on salary; if no TDS was deducted they may not issue one.
What is the difference between Form 16 Part A and Part B?
Part A is generated by the TRACES portal and certifies the TDS deducted and deposited each quarter against your PAN. Part B is prepared by your employer and shows how your taxable salary and tax were computed - salary breakdown, exemptions, standard deduction, Chapter VI-A deductions and the tax calculation.
Can I file my ITR without Form 16?
Yes. Use your payslips for the salary figures and Form 26AS / AIS on the e-filing portal for TDS credit. The pre-filled ITR already carries the salary and TDS your employer reported.
My Form 16 shows the wrong tax regime. Can I change it while filing?
Yes, if you are salaried with no business income. The regime your employer used for TDS does not bind you; choose the better regime in the ITR and the difference is settled as a refund or a self-assessment payment.
I have two Form 16s. How do I file?
Combine the salary from both, apply the standard deduction only once, and compute tax on the total. Combined TDS is usually short because each employer started from the nil slab, so expect to pay the balance with the return.
What if the TDS on Form 16 does not appear in Form 26AS?
You cannot claim it until it does. The employer either did not deposit the tax or filed the TDS return with wrong details. Ask them to correct it; if they will not, raise a grievance on the e-filing portal.