What is Form 16?

Definition

Form 16 is the annual certificate an employer issues to an employee showing the salary paid and the tax deducted at source during a financial year. It is the primary document an employee uses to file their income tax return.

How it works

It comes in two parts. Part A shows the summary of tax deducted and deposited quarterly, generated from the income tax portal. Part B is the annexure showing the salary breakdown, exemptions, deductions and the resulting tax computation.

What it means in India

Form 16 is issued for a financial year running April to March, and the due date for issuing it falls after the fourth quarter TDS return is filed. Somebody who changes jobs mid-year receives one from each employer, and their return combines both, which is why the exit month figures must be right.

What people get wrong

• Issuing Part B without Part A, or a manually typed Part A. Part A must be generated from the portal so it reconciles with what was actually deposited.
• Not issuing it to employees who left mid-year, who need it as much as anybody still on the payroll.

Terms this one depends on

More on statutory deductions and benefits

Where this shows up in practice

Almost everything on this page ends up as a line on a payslip or a figure in a register. Shiftelio keeps attendance, leave, salary structure and the statutory deductions in one place, so the number in the letter and the number in the payslip come from the same record.