Form 16: What It Is, How to Read It & How to File ITR With It (2026)

Form 16 is the annual TDS certificate issued by your employer, and it is the single most important document for filing your Income Tax Return. Despite being just four pages long, it is also the most commonly misunderstood: employees gloss over it, CAs copy-paste it, and mismatches between Form 16, Form 26AS, and the Annual Information Statement (AIS) are the single biggest cause of ITR notices. This guide explains exactly what each field means, how to reconcile the three documents, and what to do when the numbers don't match.

What is Form 16?

Form 16 is a TDS certificate issued under Section 203 of the Income Tax Act by every employer who has deducted tax at source from an employee's salary during the financial year. It summarises your gross salary, exempt allowances, deductions claimed, computed tax, and the TDS that was actually deposited against your PAN. Your employer must issue it by 15 June following the close of the financial year (so FY 2025-26 Form 16 is due by 15 June 2026).

If you had multiple jobs during the year, each employer issues a separate Form 16. No Form 16 is issued if your employer did not deduct any TDS — in that case you must compute tax from salary slips and bank credits yourself.

Part A vs Part B

Form 16 has two logically distinct sections:

Part A — the TRACES portion

Generated directly from the TRACES portal by the government, Part A contains:

• Employer's TAN and PAN
• Employee's PAN and address
• Period of employment in that financial year
• Summary of quarterly TDS deposits (challan number, BSR code, date)
• Digital signature of the deductor

This part cannot be edited by your employer. If the TDS amounts shown here do not match what was actually deducted from your salary, the problem is at the filing stage — your employer either filed the TDS return late, used a wrong PAN, or failed to deposit the amount.

Part B — the salary computation

Prepared by your employer, Part B shows the full tax computation:

• Gross salary (Basic + allowances + perquisites)
• Less: exempt allowances (HRA, LTA, etc.)
• Less: standard deduction (Rs. 50,000 Old / Rs. 75,000 New)
• Less: deductions under Chapter VI-A (80C, 80D, 80CCD(1B), etc.)
• Taxable income
• Tax on total income + education cess
• Less: TDS already deducted
• Tax payable / refundable

Matching Form 16 with Form 26AS and AIS

Three documents must agree before you file:

• Form 16 Part A — what your employer says they deposited
• Form 26AS — the tax credit statement available on incometax.gov.in, showing TDS/TCS credits against your PAN from all sources
• Annual Information Statement (AIS) — a broader view that also includes bank interest, dividends, property transactions, and high-value purchases

Common mismatches and how to fix them

• Wrong PAN on TDS return: Most common issue. Employer filed TDS with a typo in your PAN. Fix by asking employer to file a correction statement on TRACES.
• Late deposit of TDS: Amount deducted but not yet showing in 26AS. Wait 1-2 weeks for the quarter end; if still missing, escalate to the employer's finance team.
• AIS shows higher salary than Form 16: Usually an adjustment for ESOP vesting or bonus that was paid but not fully covered. Verify with HR and claim only what was actually paid.
• Interest income in AIS not in Form 16: Bank interest is not reported in Form 16 (that only covers salary). Add it manually to ITR and pay self-assessment tax if needed.

Using Form 16 to file ITR-1

For most salaried employees with a single employer, no capital gains, and no rental income, Form 16 is essentially a filled-in ITR:

1. Salary details — copy the "Income chargeable under the head Salaries" figure from Form 16 Part B into ITR-1 Part B Gross Total Income.
2. Deductions — mirror the 80C/80D/80CCD(1B) figures into the respective fields; do not re-claim items already reflected in your gross-minus-exempt salary.
3. TDS — pre-filled in the ITR portal from 26AS; cross-check against Form 16 Part A.
4. Bank details — pre-validated account for the refund.
5. Verify — Aadhaar OTP, net banking, or post the signed ITR-V to CPC Bengaluru within 30 days.

What if you change jobs mid-year?

Give Form 12B (previous employer's salary and TDS) to your new employer within the first month. They will consolidate and issue a single annual Form 16 capturing both stints. Without this, each employer treats you as a fresh hire, applies the standard deduction and basic exemption separately, and your combined annual TDS falls short — you then have to pay the shortfall as self-assessment tax before filing.

Form 16A and Form 16B

Don't confuse these. Form 16 is for salary TDS only. Form 16A covers non-salary TDS — bank interest, professional fees, contractor payments, etc. Form 16B is issued by the buyer of immovable property (over Rs. 50 lakh) to the seller, showing the 1% TDS on the transaction. All three flow into Form 26AS.