Form 16
What Form 16 means, how it works, a worked example, the mistakes we see and the questions founders ask.
DefinitionForm 16 is the TDS certificate an employer issues to each employee by 15 June, showing the salary paid, deductions claimed and the tax deducted and deposited during the financial year.
Form 16 has two parts. Part A comes from the TRACES portal and shows the employer's TAN, the employee's PAN and the quarterly TDS deposited. Part B is the employer's breakup of salary, allowances, exemptions such as HRA, deductions under Chapter VI-A if the old regime was chosen, and the resulting tax. You meet it every June as an employee, and as an employer you must issue it after filing the fourth-quarter 24Q return. What it means for you: it is the primary document for filing an ITR, and its figures should match Form 26AS and the AIS. As a founder drawing salary from your own company, you need to run TDS on it and issue yourself a Form 16, which banks ask for in loan applications. Missing or late certificates attract a penalty per day.
How Form 16 works
Form 16 is issued under Section 203 by every employer that deducted tax from salary under Section 192 during the year. Part A is generated on the TRACES portal from the employer's filed 24Q returns and shows the TAN, the employee's PAN, the period of employment and the quarterly tax deducted and deposited, with challan references. Part B is prepared by the employer and gives the computation: gross salary, exempt allowances, standard deduction, Chapter VI-A deductions where the old regime applies, the regime chosen, and tax payable against tax deducted.
The due date is 15 June following the financial year, which is 15 days after the fourth-quarter 24Q return is due on 31 May. The employer downloads Part A from TRACES, prepares Part B in the prescribed format, signs digitally or physically and gives it to each employee. An employee who worked for two employers in a year receives two Form 16s and must combine them in the return.
Form 16A is the equivalent certificate for tax deducted on non-salary payments such as professional fees, rent, interest and contractor bills, issued quarterly within 15 days of the due date of the 26Q return (15 August, 15 November, 15 February and 15 June). Both certificates match Form 26AS, which is why a certificate whose figures are not in 26AS is a sign that the deductor's return is missing or wrong.
A Hyderabad founder draws a salary of ₹18 lakh from her own company in 2025-26. The company deducts TDS monthly, files 24Q each quarter and downloads Part A on 5 June 2026. Part B shows ₹18 lakh gross, the ₹75,000 standard deduction under the new regime and tax of about ₹1.5 lakh deducted. She files ITR-1 in July from the certificate, and when she applies for a home loan the bank asks for the last two Form 16s as proof of income.
Mistakes we see with Form 16
- Issuing Part B from payroll software without Part A from TRACES, which leaves the employee with no proof that the tax actually reached the government.
- Issuing certificates after 15 June, which attracts a penalty of ₹100 a day per certificate under Section 272A(2)(g), capped at the tax deducted.
- Deducting tax under the old regime when the employee had opted for the new one, so the certificate and the return disagree and the refund is delayed.
Last updated 19 October 2026. Checked against the MCA, GST, Income-tax and Trade Marks rules in force for October 2026.
Where you will meet this term
Questions founders ask about Form 16
What if my employer has not given me Form 16?
Check Form 26AS and the AIS; if the TDS appears there, you can file from your payslips and the 26AS figures without the certificate. If it does not appear, the employer has not deposited or reported the tax, and you should write to them and, failing that, to the TDS assessing officer.
Do I get a Form 16 if no tax was deducted?
Not necessarily, because the certificate records tax deducted. An employer may give a salary certificate instead. Many issue Form 16 Part B anyway as a courtesy, and it is useful for a loan or visa application even with nil tax.
Can a company issue Form 16 to its own director?
Yes, and it must if the director's remuneration is salary on which TDS is deducted under Section 192. Sitting fees and commission paid to a non-executive director fall under Section 194J at 10% and get a Form 16A instead.