Form 16 is the certificate of tax deducted at source on salary. For employees it is the primary document for filing returns. For employers it is a statutory obligation with a hard deadline and a per-day penalty.
Part A and Part B
Form 16 has two parts, generated differently:
- Part A — generated and digitally signed from the TRACES portal. Contains employer and employee details, PAN and TAN, the assessment year, employment period, and a quarterly summary of tax deducted and deposited. You cannot type this yourself; it comes from your filed TDS returns.
- Part B — an annexure prepared by the employer. Contains the detailed salary breakdown, exemptions claimed, deductions under Chapter VI-A, total taxable income and tax computed.
The deadline and the penalty
- Issue by 15 June following the end of the financial year
- Penalty: ₹100 per day per certificate under section 272A(2)(g), until issued
For a 200-person company a month late, that is ₹6,00,000 of entirely avoidable exposure.
The sequence you must follow
Form 16 depends on upstream steps, so working backwards from 15 June:
- Deposit all TDS, including March, by 30 April
- File Q4 Form 24Q by 31 May
- Wait for TRACES to process the return
- Download Part A from TRACES
- Generate Part B from payroll
- Merge, sign and distribute by 15 June
Awkward cases
Employees who joined mid-year. You issue Form 16 for the period they worked with you. If they gave you their previous employer's income details and you accounted for them in TDS, your Part B reflects total income; if not, the employee reconciles both certificates at filing. Either way, ask new joiners for Form 12B.
Employees who left mid-year. You still owe them a Form 16 for their period of employment, by 15 June. Collect a personal email address at exit — leavers routinely lose access to work email and then cannot file.
Employees with no TDS deducted. Strictly, Form 16 is required where tax was deducted. Many employers issue it regardless, because employees find it useful as proof of income. Issuing it is good practice.
Corrections. If Part B has an error, reissue the corrected Part B. If Part A is wrong, file a correction return in Form 24Q, wait for processing, then download and reissue.
Before you distribute, check
- PAN of each employee matches their records exactly — a wrong PAN means the credit does not reach them
- Employment period dates are right, especially for joiners and leavers
- The tax deducted in Part A reconciles to your payroll register
- Part B totals match Part A quarterly totals
- The regime applied matches the employee's declaration
- Deductions shown are the ones for which you actually received proof
