What Form 16 is — and what it is not
Form 16 is a TDS certificate your employer issues under Section 203 of the Income-tax Act. It summarises salary paid and tax deducted during the financial year. It is not your tax return — you still file ITR separately on incometax.gov.in.
Every salaried filer should read Form 16 before entering numbers in the portal. Errors in Part B propagate into wrong taxable salary income, wrong regime assumptions, and TDS mismatches with Form 26AS.
If you are new to filing, pair this guide with ITR-1 for salaried employees and our Form 16 upload walkthrough.
Part A vs Part B
| Part | Issued by | Main contents |
|---|---|---|
| Part A | TRACES / employer | TAN, PAN, TDS deposited, quarterly TDS summary |
| Part B | Employer | Salary breakup, exemptions, deductions, net taxable salary |
You need both parts. Part A alone does not show HRA, 80C, or taxable salary computation.
Part A: TDS certificate essentials
Employer and employee details
Verify PAN, name spelling, and assessment year (2026-27 for FY 2025-26). A wrong PAN on Part A means TDS may credit to someone else's 26AS.
TAN and certificate number
The employer's TAN links TDS to the deductor in 26AS. Note the certificate number for records.
Summary of tax deducted
Part A shows quarter-wise TDS. Total TDS here should match:
- The annual TDS line on Part B (net of adjustments)
- Your employer's TDS entry in Form 26AS / AIS Part A
If Part A total ≠ 26AS, do not ignore it — see AIS mismatch guide and contact payroll before filing.
Part B: Salary breakup
Part B is an annexure employers generate from payroll. Layout varies slightly, but core sections are standard.
Gross salary (Section 17(1), 17(2), 17(3))
Includes basic, allowances, perquisites, and profits in lieu of salary. Components may appear as:
- Basic salary — base for HRA and 80CCD(2) limits
- Allowances — some exempt under Section 10 (HRA, LTA if claimed)
- Perquisites — car, rent-free accommodation, etc., valued per rules
Exemptions under Section 10
Common lines:
- HRA exemption — only if you submitted rent receipts and landlord PAN (when required). Not available in new tax regime for most salaried filers opting new regime
- LTA — blocked years and travel proof rules apply
- Other exempt allowances — as per employer policy and law
Cross-check exemptions with proofs you submitted. Over-claiming in ITR beyond Part B risks scrutiny.
Deductions under Section 16
- [Standard deduction u/s 16(ia)](/glossary/standard-deduction-u-s-16-ia) — ₹50,000 (old regime) or ₹75,000 (new regime) for AY 2026-27 as per current law
- Entertainment allowance / professional tax — professional tax u/s 16(iii) where applicable
Chapter VI-A deductions (Part B reporting)
Employers often show 80C, 80CCD(1), 80D based on your declarations — actual allowability is computed in ITR under the regime you choose. If you opt new tax regime, many of these will not reduce tax even if shown on Form 16.
Net taxable salary and TDS
The bottom of Part B shows taxable salary and tax deducted. This is your starting point for ITR-1 salary schedule, before adding other income (interest, capital gains) from AIS.
Reconciling Form 16 with 26AS and AIS
- Part A TDS total = 26AS TDS from that employer TAN
- Salary in ITR should match Part B taxable salary (plus other employers if job change)
- AIS may show additional TDS or income Form 16 does not cover (previous employer, bank interest)
Read AIS vs 26AS differences for why all three documents matter.
Common Form 16 issues
Wrong regime on Form 16
Employers default many employees to new regime TDS. You can choose old regime at filing if it saves tax — but TDS may be lower than final liability; pay balance tax via challan.
Missing previous employer
Only current employer appears. Prior salary must be added manually from old Form 16 or AIS.
80C shown but investments incomplete
Employer may deduct based on declaration; keep proofs. Incomplete PF/LIC payment does not always match declared 80C.
HRA exempt on Form 16 but you moved cities
Exemption depends on rent paid and metro rules — verify calculation if HR used outdated rent.
Job change: two Form 16s
When you switched jobs, you get one Form 16 from each employer. Each may deduct TDS in lower slabs independently — combined income can push you into higher slab with tax payable at year-end. Aggregate both Part B taxable salaries in ITR.
How LastMinute ITR uses Form 16
Uploading Form 16 PDF helps pre-fill salary and TDS — you still verify every field. We do not guarantee refund amounts or file on the government portal for you. Use imports to catch gaps early, then file on incometax.gov.in.
Upload Form 16 — free estimate
FAQ
Is Form 16 mandatory to file ITR? No — you can compute from payslips and 26AS — but Form 16 is the cleanest source for salary and employer TDS.
Digital vs physical Form 16? Both are valid; PDF from employer portal is standard. Ensure Part A and Part B are in one PDF or two clear files.
Form 16 says new regime — can I choose old regime? Often yes at filing for eligible individuals — compare using old vs new regime guide.
What if figures differ from salary slip? Payroll processes arrears, tax adjustments, and perquisites late — trust Part B for ITR if it is the final corrected certificate.
Annexure and perquisite lines
Some employers attach Annexure listing allowance-wise breakup: special allowance, transport, medical reimbursement, and perquisites (car, ESOP, accommodation). Perquisites increase gross salary even when not paid as cash. If you exercised ESOPs, Part B may show taxable perquisite — that income may push you to ITR-2 if combined with capital gains on sale.
Professional tax appears as deduction u/s 16(iii) — ensure your state PT matches payslip; some payroll systems annualise incorrectly.
Tax computation table on Part B
Many Form 16s include an inline tax computation showing rebate, cess, and monthly TDS. Use it to sanity-check employer assumptions on new vs old regime. If employer deducted assuming new regime but you plan old regime at filing, expect balance tax — not an employer error necessarily.
Quarterly TDS reconciliation habit
Each quarter, compare payslip TDS with Part A quarterly breakup. Catching a payroll bug in Q2 beats discovering it in July when correction windows are tight. If TDS is short, employer can adjust in remaining months — reducing tax payable shock at filing.
Form 16 for pension-only income
Pensioners receive Form 16-like certificates from pension disbursing authority. Labels differ from corporate Part B but map to salary schedule in ITR-1 guide. Family pension is not salary — different schedule and deduction rules apply.
Glossary cross-links while reading Part B
When you see unfamiliar labels, look up salary income, exempt allowances u/s 10, and TDS schedule in our glossary — plain-English definitions aligned to ITR fields.