Form 16

Form 16 is the certificate an employer gives an employee recording salary paid during a financial year and income tax deducted at source from it. An employee uses it to file a return, and it is the document most people reach for first when they do.

It has two parts. Part A shows the employer and employee identification and a quarterly summary of tax deducted and deposited, generated from the TRACES system rather than typed by the employer. Part B is the annexure detailing the salary breakdown, exemptions claimed, deductions allowed and the resulting tax computation.

Because Part A is generated from what was actually deposited against the employee’s PAN, a mismatch between Part A and the employee’s Form 26AS points at a filing or deposit problem on the employer’s side rather than a clerical one. That is worth checking before an employee files rather than after.

An employee who worked for more than one employer in a financial year receives a Form 16 from each, and the return has to combine them. Failing to declare previous employment to a new employer is the usual cause of an unexpected tax demand later.