Form 16 Explained, Part by Part: How to Read Part A and Part B

Form 16 is the certificate your employer gives you after the financial year, showing the salary paid to you and the tax deducted from it (TDS). It has two parts. Part A proves the tax was deposited against your PAN. Part B shows how your taxable salary and tax were worked out.

What is Form 16, and why does it matter?

Every month your employer holds back some tax from your salary and pays it to the government in your name. Form 16 is the receipt for the whole year. The income tax portal describes it as the certificate an employer gives an employee with the income, the deductions and exemptions, and the tax deducted at source.

Why should you care if the tax is already paid? Because your return is built from it. Banks ask for it as income proof for a loan. And it is the quickest way to see whether your employer gave you every deduction you declared.

Did your employer deduct no tax at all? Then you may not get one. Tax guides say the form is compulsory only where TDS was deducted, though many employers issue it anyway.

The two parts at a glance

Part A, line by line

• Employer's TAN and your PAN. One wrong character in the PAN and the tax sits in someone else's account. Check this first.
• Period of employment. If you joined or left mid-year, it shows only those months.
• Quarterly summary. Four rows, one per quarter, with the amount paid to you, tax deducted and tax deposited.
• Deposit details. The challan or voucher entries that show when each month's TDS reached the government.

The total tax deposited here should equal the salary TDS shown against your employer's TAN in Form 26AS. How to read that statement is in AIS vs 26AS.

Part B, line by line

1. Gross salary. Split into salary, the value of perquisites (benefits such as a company car or rent-free house) and profits in lieu of salary.
2. Exempt allowances under section 10. House rent allowance, leave travel and similar items, if you were on the old regime and gave proofs.
3. Deductions under section 16. The standard deduction: Rs 75,000 in the new regime and Rs 50,000 in the old regime for FY 2025-26. Professional tax appears here in the old regime.
4. Other income reported by you. Interest or house property figures you told your employer about.
5. Chapter VI-A deductions. 80C, 80D and the rest, in the old regime. The employer's contribution to NPS under 80CCD(2) can appear in both regimes.
6. Total taxable income and tax. Tax on that income, the section 87A rebate if you qualify, 4% health and education cess, and relief under section 89 for arrears.

Part B also tells you which regime your employer used. If you are still choosing, read old vs new tax regime.

A worked example

Ritu earned a gross salary of Rs 18,00,000 in FY 2025-26 and stayed in the new regime. Her Part B should read like this.

Her Part A should then show Rs 1,50,800 deducted and deposited across the four quarters. If it shows Rs 1,40,000, she pays the gap herself when she files. If Part A says Rs 1,50,800 but Form 26AS shows less, the employer has not deposited or reported it correctly, and she should ask them to fix their TDS statement before she files.

The mistake people usually make

They treat Form 16 as the whole return. It only knows what your employer knows. Savings account interest, fixed deposits, share sales, rent and freelance income are not in it unless you declared them. The tax department sees these in your AIS, and a return copied from Form 16 alone gets a mismatch notice.

The second mistake is accepting a Form 16 typed out in a spreadsheet. A valid one is generated from TRACES and carries a certificate number. The third is assuming Part B is right. If you sent rent receipts or an insurance proof in January and it is missing, you can still claim it in your return, provided you file on time and the regime allows it.

What changes from 1 April 2026?

The Income-tax Act, 2025 applies from tax year 2026-27. Your return for FY 2025-26 still follows the 1961 Act, and the Form 16 you received in June 2026 is correct as it is.

For salary earned from April 2026, tax publishers report that the certificate becomes Form 130 under Rule 215 of the Income-tax Rules, 2026, due by 15 June after the tax year. That makes June 2027 the first time you should see one. As reported, it has three parts in place of two, with the detailed computation moved to a Part C, and it can only be generated from TRACES. What you check stays the same: your PAN, the tax deposited, and the computation.

What to do when your Form 16 arrives

1. Check your name, PAN and the period of employment.
2. Match the total TDS in Part A with Form 26AS.
3. Match gross salary in Part B with your March payslip's year-to-date figure.
4. Look for any exemption or deduction you declared that is missing.
5. Add the income Form 16 does not know about, then file. The full list of papers is in documents required for ITR filing.

Frequently asked questions

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