What Form 16 Is and Why the Employer Owns It
Form 16 is the certificate an employer issues to each employee showing the salary paid during the financial year and the tax deducted at source on it. It is issued under section 203 of the Income Tax Act and is the employee's primary evidence, when filing their return, that the TDS shown against their PAN was actually deducted and deposited. If you deducted TDS from anyone's salary during the year, you must issue Form 16 to that person.
Employers sometimes treat Form 16 as a courtesy document generated by the accountant in June. It is a statutory certificate, and its accuracy has consequences for the employee: a mismatch between Form 16 and the tax department's own records (Form 26AS and AIS) leads to notices, refund delays and awkward conversations with HR. For the employer, a Form 16 that does not match the filed TDS returns invites scrutiny of the returns themselves.
Employees with no TDS deducted, typically those whose taxable income sits under the ₹12 lakh rebate threshold in the new regime (₹12.75 lakh gross for salaried after the ₹75,000 standard deduction), are not strictly entitled to Form 16, but most employers issue a salary certificate or a Part B-style statement anyway, because banks and lenders ask for it. Read the Form 16 glossary entry for the one-paragraph definition.
- Form 16 certifies salary paid and TDS deducted for the financial year, per employee
- Mandatory for every employee from whom tax was deducted
- Employee-side mismatches with 26AS/AIS come back to the employer as queries
- Consider issuing a salary statement even where no TDS was deducted
Part A and Part B: What Each Contains
Part A is generated by the Income Tax Department's TRACES portal from the TDS returns you filed. It shows the employer's TAN and PAN, the employee's PAN, the period of employment, and a quarter-wise summary of the salary amount reported, tax deducted and tax deposited, with challan identification numbers. Because it is produced from your filed Form 24Q, you cannot type Part A yourself; if the figures are wrong, the fix is a corrected 24Q, not an edited certificate.
Part B is the annexure with the computation: gross salary broken into salary under section 17(1), perquisites under 17(2) and profits in lieu under 17(3); allowances exempt under section 10 (in the old regime); the standard deduction (₹75,000 in the new regime for FY 2026-27); professional tax; income under other heads reported by the employee; Chapter VI-A deductions where the old regime applies; total taxable income; tax on it by slab; rebate under section 87A; surcharge and 4% health and education cess; relief under section 89; and the net tax payable against tax deducted. Part B is also downloadable from TRACES, populated from the salary annexure in the fourth-quarter 24Q, which is why that annexure must be complete and accurate.
Both parts must carry the employer's signature, physically or with a digital signature certificate. For any employee who worked for you for only part of the year, Part A shows only your period, and Part B shows only the salary you paid; the employee combines certificates from each employer when filing.
- Part A: TRACES-generated TDS summary by quarter with challan details; corrected only via 24Q
- Part B: salary breakup, exemptions and deductions per regime, tax computation, rebate and cess
- Both parts signed, physically or digitally, by the authorised signatory
- Part-year employees receive a certificate covering only your period
Due Date and Prerequisites
Form 16 must be issued by 15 June following the end of the financial year. For FY 2025-26 (April 2025 to March 2026), that meant 15 June 2026. The date is downstream of the fourth-quarter Form 24Q, which must be filed and processed before TRACES will generate Part A. Late filing of 24Q therefore pushes Form 16 late as well, and late issue of Form 16 carries a per-day penalty under the Act, so the two deadlines should be planned together.
The prerequisites are unglamorous and cause most of the delays. Every employee needs a valid PAN in the payroll master, verified against the department's database; a wrong or unverified PAN means the TDS is not credited to that person and Part A shows an error. All four quarterly 24Q returns must be filed and accepted. Every TDS challan paid during the year must be correctly mapped to the deductees in the returns; an unmatched challan is the second most common reason Part A does not reconcile.
Finally, the salary details in the fourth-quarter 24Q annexure must agree with your payroll register and with what you intend to show in Part B. If your payroll register says gross ₹8,40,000 and the annexure says ₹8,20,000 because a March arrear was missed, the employee's Form 16 and their AIS will disagree. Reconcile the register to the annexure before filing, not after.
- Issue by 15 June following the financial year; plan Q4 24Q filing to allow processing time
- Verified PAN for every employee before the year's first TDS deduction
- All four 24Q returns filed and accepted; every challan matched to deductees
- Q4 24Q salary annexure reconciled to the payroll register
How Form 16 Is Generated Through TRACES
At a high level the flow is the same for every employer. Log in to TRACES as a deductor with your TAN. Confirm that the fourth-quarter 24Q has been processed without defaults. Request Form 16 for the financial year, selecting Part A and Part B; TRACES asks for verification details from a filed return and a set of challan and PAN combinations to authenticate the request. The request is queued and the files become available for download after processing, usually within a day or two.
Download the files and the department's PDF conversion utility, and generate the PDF certificates. Then sign them: for any meaningful headcount, a digital signature certificate registered with TRACES lets you sign the whole batch. Distribute securely, ideally through the employee self-service portal rather than email attachments, and keep a copy of every certificate issued alongside the payroll records for the year.
Tax software and payroll platforms often wrap these steps in a friendlier interface and add the Part B computation from your payroll data. Attend Mitra prepares the salary, TDS and deduction data through the year and exports it, but Form 16 issuance itself happens through TRACES or your tax software, not inside Attend Mitra. If a vendor tells you their attendance or payroll product 'issues Form 16', ask how it interacts with TRACES.
- Log in to TRACES as deductor; confirm Q4 24Q is processed without defaults
- Request Part A and Part B for the year; authenticate with return, challan and PAN details
- Download, convert to PDF with the department utility, sign digitally in bulk
- Distribute through self-service and retain copies with the year's payroll records
New Regime vs Old Regime: Declarations That Shape Part B
The new regime is the default for salaried employees. For FY 2026-27 its slabs are nil up to ₹4 lakh, 5% for ₹4–8 lakh, 10% for ₹8–12 lakh, 15% for ₹12–16 lakh, 20% for ₹16–20 lakh, 25% for ₹20–24 lakh and 30% above ₹24 lakh, with a ₹75,000 standard deduction for salaried employees and a rebate under section 87A of up to ₹60,000 so that taxable income up to ₹12 lakh pays nil. Most Chapter VI-A deductions and HRA exemption do not apply in the new regime, so Part B for a new-regime employee is short.
An employee who wants the old regime must declare it to you at the start of the year (or when they join), and provide investment proofs before your proof-collection cutoff, typically January or February. Part B for an old-regime employee then shows HRA and other section 10 exemptions and the section 80C, 80D and similar deductions you accepted. Record the regime choice and the proofs against the employee, because the department may ask how a particular deduction in Part B was substantiated.
Where an employee changes their preference or you accepted proofs after the cutoff, the fix is to adjust TDS in the remaining months of the year and reflect the final position in the Q4 annexure. Do not issue a Part B that differs from what you reported; the employee's AIS will expose the difference. For salary-structure decisions that affect what appears in Part B, see salary structure components in India and the TDS on salary glossary entry.
- New regime is the default: slabs from ₹4 lakh, ₹75,000 standard deduction, 87A rebate to ₹12 lakh
- Old regime only on the employee's declaration, with proofs collected before your cutoff
- Record the regime and proofs against the employee record for each year
- Part B must match the Q4 24Q annexure exactly
Common Errors and How to Prevent Them
PAN mismatch is the top error: a typo in the master, a PAN belonging to a family member, or an employee whose PAN is inoperative. Validate PANs at onboarding and again before the first quarterly return. Second is the challan mismatch: TDS paid under the wrong section or assessment year, or a single challan not fully consumed by the deductee rows in the return. Third is the register-to-annexure gap described above, where arrears, a March increment or a joining bonus is in payroll but not in the Q4 annexure.
Other frequent problems: forgetting to report tax deducted by a previous employer that the employee declared to you (leading to double or under-deduction); issuing Part B with an old standard deduction figure; and issuing Form 16 for employees whose exit was not properly recorded, so their period of employment in Part A is wrong. Each of these is a master-data or reconciliation failure, which is why the payroll compliance checklist for India puts a 24Q reconciliation on the quarterly list.
- Validate PAN at onboarding and before each quarterly return
- Map every challan fully to deductee rows; use the correct section and assessment year
- Reconcile payroll register to the Q4 annexure before filing
- Record previous-employer TDS declarations and accurate exit dates
Form 16 vs Form 16A vs 26AS and AIS; Multiple Employers
Form 16 is for TDS on salary under section 192. Form 16A is the TDS certificate for payments other than salary: contractor payments under 194C, professional fees under 194J, rent, commission and so on, generated from Form 26Q rather than 24Q. If you pay a security agency or a housekeeping contractor and deduct TDS on their invoices, the agency receives Form 16A from you, not Form 16. Their guards receive Form 16 from the agency, which is their employer.
Form 26AS and the Annual Information Statement (AIS) are the taxpayer's own view of what has been reported against their PAN by all deductors and reporting entities. The employee will compare your Form 16 with their 26AS/AIS; where these differ, the department's records win until you file a correction. An employee with two employers in one year receives two Form 16s and must combine them; if the second employer was told about the first employer's salary via Form 12B, its Part B computes tax on the combined income, and its TDS reflects that.
What should payroll software export to support all this? A year-to-date salary register per employee with every taxable component, exempt allowances by section, professional tax deducted, TDS deducted by month with challan references, the regime declaration and accepted proofs. Attend Mitra produces the salary register and TDS data as Excel and PDF exports so your tax software or consultant can populate Part B and file 24Q; the certificate itself comes from TRACES.
- Form 16: salary TDS (24Q). Form 16A: non-salary TDS such as contractor or professional fees (26Q)
- 26AS and AIS are the department's records against the employee's PAN; they prevail over your certificate
- Employees with two employers get two Form 16s; Form 12B lets the later employer compute combined tax
- Export year-to-date components, exemptions, PT and monthly TDS with challan references