What is Form 16?

Form 16 is a certificate issued under Section 203 of the Income-tax Act, 1961, by an employer to an employee, certifying the tax deducted at source (TDS) on salary during a financial year. It is one of the primary documents used by salaried employees to file their income tax return.

• Any employee from whose salary the employer has deducted TDS during the financial year must be issued a Form 16 by the employer.
• If no TDS was deducted because income was below the taxable threshold, the employer is not statutorily required to issue Form 16, though many still provide a salary statement.

• Part A contains employer and employee PAN/TAN details, and a summary of tax deducted and deposited each quarter, generated and downloaded through the TRACES portal.
• Part B is an annexure prepared by the employer, detailing the salary breakup, allowances exempt under Section 10, deductions claimed under Chapter VI-A (like Section 80C), and the final tax computation.
• Employers must issue Form 16 to employees by the due date notified by the Income Tax Department each year for the preceding financial year.

• Treating Form 16 figures as final without reconciling them against Form 26AS/Annual Information Statement before filing a return.
• Not collecting Form 16 from a previous employer when changing jobs mid-year, leading to incorrect tax computation for the full year.
• Confusing Form 16 (for salary TDS) with Form 16A (for TDS on non-salary payments).