Form 16 is the TDS certificate an employer must give every employee whose salary suffered tax deduction at source, summarising the year's salary paid and tax deducted and deposited. It has two parts — Part A (tax deposited, from the TRACES portal) and Part B (the salary and deduction break-up) — and is the primary document for filing a salaried ITR.
Employers deduct TDS on salary monthly based on your projected annual income and chosen tax regime, deposit it, and report it in their quarterly TDS returns. After the fourth quarter is processed, the employer downloads Part A from TRACES and issues Form 16, customarily by mid-June following the year end. Part B shows gross salary, exemptions, the standard deduction, other deductions reported, and the final tax computation the employer used.
If you run payroll in your MSME, issuing Form 16 on time is your legal obligation, and it depends entirely on your own TDS returns being filed correctly — a missed or defective quarterly return means employees see short credit in their 26AS and come back to you angry at filing season. Clean payroll TDS is one of the cheapest employee-trust wins available to a small employer.
As an employee or director, do not treat Form 16 as gospel: verify Part A's deposited tax against your 26AS, and remember the ITR must include income your employer never saw — bank interest, dividends, capital gains, rent. Two Form 16s from a job switch is the classic under-deduction scenario, since each employer applied the full slab benefit; expect a self-assessment tax top-up before filing.
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Reviewed to the law in force in FY 2026-27. General information, not advice — confirm the position for your facts before acting.