Form 16

Form 16 is the annual certificate of tax deducted at source from salary, issued by the deductor to the employee under Section 203 of the Income-tax Act, 1961 read with Rule 31(1)(a) of the Income-tax Rules, 1962, due on or before 15 June following the financial year, and valid only when both its parts are generated and downloaded from the TRACES portal. It certifies the salary paid, the exemptions and deductions allowed, and the tax deducted and deposited with the Central Government for a financial year.

For salary paid in the financial year 2025-26, Form 16 is the operative certificate, issued by 15 June 2026 and used to file the return for the assessment year 2026-27. It stops there. The Income-tax Rules, 2026, notified by Central Board of Direct Taxes Notification No. 22/2026, G.S.R. 198(E), dated 20 March 2026, prescribe Form 130 under Rule 215 as the certificate for deduction under Section 392 and Section 393(1) of the Income-tax Act, 2025, from tax year 2026-27 onward. The renumbering is notified, not proposed.

The certificate is not a summary an employer writes. Circular No. 04/2013, F. No. 275/34/2011-IT(B), dated 17 April 2013 made Part A generable only through TRACES for sums deducted on or after 1 April 2012, expressly including government deductors who remit by book entry, and Notification No. 36/2019 dated 12 April 2019 brought Part B into the same route from the financial year 2018-19. Both parts are drawn from the quarterly Form 24Q the deductor has already filed, which is why an error in Form 16 is almost never fixed in Form 16.

This article covers the two parts and where each figure originates, the 15 June due date and the penalty for missing it, the family of certificates issued under Section 203, the book-adjustment route by which a central government employee’s certificate is produced, the pensioner’s certificate from the pension-paying bank, two employers in one year, the reconciliation against Form 26AS before filing, how an error is corrected, and the switch to Form 130. Tax computation itself sits on the TDS on salary page, which covers the average-rate method under Section 192.

Part A and Part B

Form 16 has two parts, and both are generated on the TRACES portal, the Income Tax Department’s TDS Reconciliation Analysis and Correction Enabling System. Part A certifies the tax; Part B (Annexure) certifies the income it was computed on.

Part A carries the deductor’s name and Tax Deduction and Collection Account Number (TAN), the employee’s Permanent Account Number (PAN), the assessment year, the period of employment in the year, and the quarter-by-quarter summary of tax deducted and deposited. Circular No. 04/2013 dated 17 April 2013 provides at paragraph 2.1 that all deductors, including government deductors who deposit tax in the Central Government Account through book entry, shall issue Part A by generating and downloading it through TRACES for all sums deducted on or after 1 April 2012, and that Part A shall carry a unique TDS certificate number. Paragraph 3.2 of the same circular states that only a Part A carrying that Unique Identification Number is valid compliance with Section 203.

Part A shows the deposit in one of two ways. A government deductor’s credits appear as book-adjustment entries carrying a Book Identification Number and no challan; every other deductor’s credits appear against a Challan Identification Number made up of the bank branch BSR code, the date of deposit and the challan serial number. A status column marks each credit as Provisional or Final. For a book-adjustment credit it reads Provisional until the Pay and Accounts Officer’s Form 24G is verified, which is a matching state and not a defect in the certificate.

Part B (Annexure) was for years typed by the employer, and paragraph 2.4 of Circular No. 04/2013 said so in terms. That position changed twice in 2019. Notification No. 36/2019 dated 12 April 2019 substituted Part B (Annexure) of Form 16 and Annexure II of Form 24Q with a standardised format aligned to the return forms, and CBDT (Systems) Notification No. 09/2019 dated 6 May 2019 laid down the procedure under which all deductors, government book-entry deductors included, generate and download Part B from TRACES for sums deducted on or after 1 April 2018. A Part B typed outside that route is not the notified certificate.

What Part B sets out is the tax computation in the order the statute takes it: salary under Section 17(1), perquisites under Section 17(2) and profits in lieu of salary under Section 17(3); the exemptions under Section 10 including the house rent allowance exemption under Section 10(13A); the deductions under Section 16, being the standard deduction, the entertainment allowance and professional tax; the Chapter VI-A deductions such as Section 80C and the National Pension System contributions under Section 80CCD; and from these the taxable income, the tax on it, the Section 87A rebate, the 4% health and education cess, any relief under Section 89 and the net tax payable or refundable. Part B also records whether the employer withheld under the old regime or the new one.

Where the Part B figures come from

Every figure in Part B is copied by TRACES from Annexure II of the fourth-quarter Form 24Q, not from anything the employer types into the certificate. This is the single most useful fact about reading a wrong Form 16.

Annexure II is the salary-detail annexure of the fourth-quarter statement, substituted in its current form by Notification No. 36/2019 dated 12 April 2019 in the same stroke that substituted Part B. The deductor reports each employee’s gross salary, exempt allowances, Section 16 deductions, Chapter VI-A deductions and computed tax there once a year, TRACES processes the statement, and Part B is rendered from the processed record. A wrong exemption in Part B therefore means a wrong entry in Annexure II, and correcting it means filing a correction statement for the fourth quarter and downloading the certificate again.

The Income Tax Department’s TRACES e-tutorial on downloading Form 16 records the practical consequence for the transition year: a deductor who filed the fourth-quarter Annexure II before 12 May 2019 in the old format has to file a revision in deductee details in the new format before Part B can be generated at all.

The 15 June due date

Form 16 is due on or before 15 June of the financial year immediately following the financial year in which the income was paid and the tax deducted, under Rule 31(3) of the Income-tax Rules, 1962. For salary paid in the financial year 2025-26, the certificate was due on 15 June 2026.

The date is set two weeks after the statement it is built from. Rule 31A(2), as substituted by Notification No. 30/2016 dated 29 April 2016 with effect from 1 June 2016, fixes 31 May as the due date for the fourth-quarter Form 24Q, covering the quarter ending 31 March. TRACES then processes that statement, and the deductor has about a fortnight to request, download, authenticate and issue both parts. The gap has widened once: paragraph 2.5 of Circular No. 04/2013 dated 17 April 2013 records that the date then in force under Rule 31(3) was 31 May, the same day as the statement itself.

Form 16 is annual because Section 192 tax is deducted month by month against an annual estimate. Form 16A, covering deduction under every other provision of Chapter XVII-B, is quarterly, due within fifteen days of the due date for the quarterly statement.

Penalty where the certificate is not issued

A deductor who fails to issue Form 16 in time is liable to a penalty of Rs. 100 for every day the default continues under Section 272A(2)(g) of the Income-tax Act, 1961, and that penalty cannot exceed the amount of tax deductible. The cap is what usually makes the exposure small on a single employee and substantial across an establishment.

The rate quintuples under the new statute. Section 465(2)(g) of the Income-tax Act, 2025 sets Rs. 500 for every day during which the failure to furnish a certificate under Section 395(4) continues, and Section 465(3)(b) caps the penalty at the tax deductible or collectible. The penalty is imposed by the Joint Director or the Joint Commissioner under Section 465(4)(d) unless the default arose in a proceeding before an authority of that rank or above.

An employee who has not received the certificate is not prevented from filing. The return is built from the salary slips and from the tax credit in Form 26AS and the Annual Information Statement, and Section 205 of the 1961 Act, carried forward as Section 401 of the 2025 Act, bars a direct demand on the employee for tax that was actually deducted at source. The remedy for non-issue lies against the deductor, not against the credit.

Form 16 and the other Section 203 certificates

Section 203 produces one family of certificates, separated by what was paid rather than by who paid it. Form 16 is the salary member of that family.

All four are downloaded from TRACES by the deductor concerned. Circular No. 03/2011 dated 13 May 2011 and Circular No. 01/2012 dated 9 April 2012 made the TRACES route mandatory for Form 16A first, and Circular No. 04/2013 dated 17 April 2013 extended it to Part A of Form 16, which is why the salary certificate reached the portal two years after the non-salary one. Forms 16B and 16C are one-off certificates tied to a single property or tenancy and rarely concern a central government employee in the capacity of employee.

How a central government employee gets Form 16

For a serving central government employee the Drawing and Disbursing Officer is the deductor, and the certificate is produced through a route peculiar to government, because central government tax is remitted by book adjustment rather than by a challan paid into a bank.

The chain runs in five steps. The DDO deducts tax from the monthly salary bill. Its Pay and Accounts Officer credits the amount to the Central Government by book adjustment without a physical challan, under Rule 30(1) of the Income-tax Rules, 1962. The Pay and Accounts Officer files a monthly Form 24G, the book-adjustment statement, which generates a Book Identification Number made up of the Form 24G receipt number, the DDO serial number and the date of the transfer voucher. The Pay and Accounts Officer passes that number to the DDO, who quotes it against each deduction in the quarterly Form 24Q. TRACES matches the Book Identification Number against the Form 24G record, and the DDO then requests, downloads, authenticates and issues both parts of Form 16.

Two consequences follow for a government employee reading the certificate. The Provisional marking against a book-adjustment credit reflects the Form 24G verification state and turns Final once the Pay and Accounts Officer’s statement is verified, so it is not a reason to withhold the credit in the return. And an unquoted or mismatched Book Identification Number in Form 24Q, not an unpaid tax, is the usual reason a government employee’s tax fails to appear in Form 26AS, which is fixed by a correction statement from the DDO.

Circular No. 04/2013 dated 17 April 2013 names government book-entry deductors in the same breath as every other deductor at paragraph 2.1, so a DDO has no discretion to issue a certificate outside TRACES. The e-tutorial published by the Income Tax Department on the TRACES portal adds the mechanical detail that the downloaded file arrives as a ZIP protected by the deductor’s TAN in capital letters, and is converted to PDF using the department’s own Form 16 PDF Converter Utility, with the authorised signatory signing manually or by digital signature certificate.

Form 16 for a pensioner

A pensioner’s Form 16 comes from the pension-paying bank, not from the former office. Pension chargeable under the head Salaries attracts deduction under Section 192, so the bank branch disbursing the pension is the deductor and issues the annual certificate exactly as an employer does, by 15 June.

The limit of that certificate is what it does not know. The bank certifies the pension it pays and the tax it deducted on it. It does not see a second pension from another authority, family pension received by the same person, or interest income where tax was deducted under Section 194A, and it will not have applied the Section 89 relief on arrears unless the pensioner claimed it there. A pensioner therefore reconciles the bank’s Form 16 against Form 26AS and the Annual Information Statement before filing, as the income tax for pensioners page sets out. A pensioner aged 75 or above with only pension and interest from the same bank may instead fall within the Section 194P route, where the specified bank computes the total income and deducts tax, and no return is required at all.

Two employers in one financial year

Each employer issues Part A for its own period of employment, because each is a separate deductor with a separate TAN and a separate Form 24Q. There is no single consolidated certificate unless the employee makes one possible.

The mechanism is Rule 26A(1) of the Income-tax Rules, 1962: the assessee may furnish to the new employer, in Form No. 12B, the salary due or received from the other employer and the tax deducted from it. Where Form 12B is furnished, the new employer estimates tax on the combined salary for the year and its Part B computes on that basis. Where it is not, and Rule 26A(1) makes it optional by using “may”, each employer withholds only on the salary it pays, each applies the basic exemption and the Section 87A rebate independently, and the employee is left with a shortfall to pay as self-assessment tax at filing. That shortfall is the standard consequence of a mid-year job change, not an error by either employer.

At filing the employee adds the gross salary from every Part B, claims the Section 16 standard deduction once rather than once per employer, and totals the tax credit from every Part A after checking it against Form 26AS.

Form 12BA, the perquisite statement issued with Form 16

Form 12BA is the statement of perquisites and profits in lieu of salary with their values, required by Rule 26A(2)(b) of the Income-tax Rules, 1962 where the salary paid or payable to the employee exceeds Rs. 1,50,000. It is issued along with Form 16 and is the itemised detail behind the single perquisite figure that Part B carries under Section 17(2).

Below that threshold no separate statement arises: Rule 26A(2)(a) allows the same particulars to be given in the relevant columns of Form 16 itself. For a central government employee the entries that commonly appear in Form 12BA are the value of rent-free or concessional accommodation in a government quarter computed under Rule 3, the value of a motor car provided for personal use, and interest-free or concessional loans, each valued under the relevant sub-rule of Rule 3.

When no Form 16 is due

No tax deducted means no certificate. Section 203 casts the obligation on a person deducting tax at source, so where the salary after exemptions and deductions falls below the taxable limit and the employer deducts nothing, there is nothing to certify and no default in not issuing a certificate. Many establishments issue a Part B or a salary statement anyway as a courtesy; that document is not a Form 16 and carries no TRACES certificate number.

A second case produces the same outcome for a different reason. TRACES generates Form 16 only against a valid PAN reported in the TDS statement, so where the PAN is missing, invalid or wrongly keyed in Form 24Q, no certificate can be generated for that employee even though tax was deducted. The fix is a correction statement in the deductee details, after which the certificate becomes available. Under Section 206AA of the 1961 Act, the same missing PAN would also have forced deduction at the higher of the specified rate or 20%, a position carried into Section 397(2)(b) of the Income-tax Act, 2025.

Reconciling Form 16 against Form 26AS and the Annual Information Statement

Reconcile before filing, not after a notice. The tax in Part A and the tax in Form 26AS are drawn from the same processed Form 24Q, so the two agree whenever the statement is right and diverge whenever it is not, which makes the comparison a direct test of the statement rather than of the certificate.

Three mismatches account for most cases. A wrong PAN in Form 24Q sends the credit to another taxpayer or to no one; a wrong assessment year parks it in the wrong year; and an unquoted Book Identification Number leaves a government deduction unmatched. In each case the correction is a revised statement filed by the deductor, and the employee should not claim credit that the department cannot see, because the claim is disallowed in processing under Section 143(1) and raises a demand with interest.

The Annual Information Statement is the wider check and covers what Form 16 never reports: interest credited by a bank, dividend, mutual fund and securities transactions, and rent received. The salary figure in Part B should agree with the salary reported in the Annual Information Statement, and any income outside Form 16 has to be added to the return whether or not tax was deducted on it.

Filing the return from Form 16

The figures in Part B map onto the return form line for line, which is why the certificate is the raw material of a salaried filing. For a resident individual with salary income, one house property and total income up to Rs. 50 lakh, the return is ITR-1, and the gross salary, the exempt allowances, the Section 16 deductions, the Chapter VI-A deductions, the taxable income and the tax deducted are carried across from Part B and Part A.

The regime is the one decision Form 16 does not make. Part B records the regime the employer applied for withholding through the year, and that choice governs the deduction alone. A salaried person without business or professional income chooses afresh in the return, subject to the new regime under Section 115BAC(1A) applying by default, so filing under the other regime is open where it is more beneficial, as the old versus new tax regime page works through. A person with business income is bound by the Form 10-IEA route instead.

Where the total tax on the return exceeds the tax deducted, the balance is paid as self-assessment tax under Section 140A before the return is filed. Where it is less, the excess is refunded to the bank account validated on the portal.

Correcting an error in Form 16

An error in Form 16 is corrected in Form 24Q, not in Form 16. The certificate is regenerated from the processed statement each time it is requested, so the only durable fix is a correction statement filed by the deductor for the quarter that carries the wrong entry, followed by a fresh download.

Which quarter depends on the field. A wrong amount, challan or Book Identification Number sits in the quarter in which the deduction was reported and is corrected there, which changes Part A. A wrong exemption, deduction or computed tax sits in Annexure II of the fourth-quarter statement and is corrected there, which changes Part B. A wrong PAN is a deductee-detail correction and moves the whole credit.

TRACES certificates are non-editable by design, and an employer that manually alters a downloaded PDF produces a document that no longer matches the department’s record. Where the deductor has closed its books or the establishment no longer exists, the employee still files on the strength of Form 26AS and the salary slips, and Section 205 protects the credit for tax actually deducted.

Checking that a Form 16 is genuine

Four marks separate a valid certificate from a document that resembles one. Part A carries a unique TDS certificate number allotted by TRACES; the page carries the TRACES watermark; the figures match Form 26AS because both derive from the same statement; and the authorised signatory has signed manually or by digital signature certificate, as paragraph 2.2 of Circular No. 04/2013 dated 17 April 2013 requires by reference to Rule 31(6).

Where the certificate is signed digitally, the signature can be validated in any standard PDF reader, and a valid signature confirms both the signatory and that the file has not been altered since signing. A certificate with no TRACES certificate number is not valid compliance with Section 203 under paragraph 3.2 of that circular, whatever else it contains. The employee cannot download the certificate directly, since TRACES issues it to the deductor against the deductor’s own login, so a lost certificate is requested again from the DDO or the employer, who can generate a duplicate from the same processed statement.

Form 130 replaces Form 16 from tax year 2026-27

Form 130 is the salary certificate under the new statute, prescribed by Rule 215 of the Income-tax Rules, 2026 as the certificate required by Section 395(4) of the Income-tax Act, 2025, and due by 15 June of the financial year immediately following the tax year. The Rules were notified by Central Board of Direct Taxes Notification No. 22/2026, G.S.R. 198(E), dated 20 March 2026 with effect from 1 April 2026, replacing the Income-tax Rules, 1962. Form 130 applies from tax year 2026-27, so the first certificates on the new form fall due on 15 June 2027.

Three changes matter to a reader who already knows Form 16. The certificate gains a third part: Part A carries the identification details, Part B the payment and tax summary, and Part C the computation, with Annexure I for deduction from salary under Section 392 and Annexure II for a specified senior citizen whose bank deducts under Section 393(1). One certificate therefore covers both the employee and the senior citizen whose bank computes and deducts, where the 1961 Act treated the second case separately. Second, Rule 215 keeps the multi-employer position: each employer issues Parts A and B for its own period, and Part C is issued by any employer or by the last employer at the employee’s option. Third, the daily penalty for non-issue rises from Rs. 100 to Rs. 500.

The companion renumbering completes the picture: the quarterly salary statement becomes Form 138 under Rule 219, prescribed for the statement required by Section 397(3)(b), and Form 26AS becomes Form 168 under Rule 245, consolidating the tax credit statement with the Annual Information Statement.

The provision map from the 1961 Act to the 2025 Act

Every provision behind Form 16 has a successor in the Income-tax Act, 2025, and the numbering shares nothing with the old statute. The map matters because an order, a notice or a payroll instruction issued after 1 April 2026 cites the new numbers for the same obligations.

The substantive duties are unchanged across the map. A Drawing and Disbursing Officer still deducts monthly, still reports quarterly, still remits by book adjustment, and still issues an annual certificate by 15 June. What changes is the section number cited, the form number issued, and the daily penalty for failing to issue it, which the Income-tax Act 2025 page sets in the wider context of the new statute.

Related Articles

• TDS on salary (Section 192)
• Form 26AS
• Form 16A
• Income-tax Act 2025
• Central Board of Direct Taxes
• Income tax for government employees
• Income tax for pensioners
• Standard deduction
• Section 87A rebate
• Section 89 relief
• How to fill Form 10E
• Form 10-IEA and opting out of the new regime
• Section 80C
• NPS tax benefits
• Old versus new tax regime
• Deductions allowed in the new tax regime
• Health and education cess
• HRA exemption under Section 10(13A)
• Professional tax
• Advance tax
• Take-home salary for central government employees
• Dearness allowance
• House rent allowance
• Basic pay
• 7th Central Pay Commission
• National Pension System
• Family pension
• Central government pension
• Central government employees in India
• Income tax calculator
• 7th CPC salary calculator

External references

• Income Tax Department
• TRACES (TDS Reconciliation Analysis and Correction Enabling System)
• Income-tax forms
• CBDT circulars
• CBDT notifications

References

1. Income-tax Act, 1961, Section 203 (certificate for tax deducted at source), Section 192 (deduction from salary), Section 205 (bar against direct demand) and Section 272A(2)(g) (penalty of Rs. 100 a day, capped at the tax deductible).
2. Income-tax Rules, 1962, Rule 31(1)(a) and Rule 31(3) (Form 16 and the 15 June due date), Rule 31(6) (authentication), Rule 31A(2) (quarterly statement due dates), Rule 30 (time and mode of payment, with Form 24G for government book adjustment) and Rule 26A (Form 12B and Form 12BA).
3. Central Board of Direct Taxes Circular No. 04/2013, F. No. 275/34/2011-IT(B), dated 17 April 2013 (Part A of Form 16 to be generated and downloaded through the TRACES portal for sums deducted on or after 1 April 2012, including by government book-entry deductors, with a unique TDS certificate number).
4. Central Board of Direct Taxes Notification No. 36/2019 dated 12 April 2019 (substitution of Part B (Annexure) of Form 16 and Annexure II of Form 24Q) and CBDT (Systems) Notification No. 09/2019 dated 6 May 2019 (procedure, formats and standards for generating Part B on TRACES from the financial year 2018-19).
5. Central Board of Direct Taxes Circular No. 03/2011 dated 13 May 2011 and Circular No. 01/2012 dated 9 April 2012 (Form 16A to be downloaded from the TRACES portal).
6. Income-tax Act, 2025, Section 392 (deduction from salary), Section 395(4) (certificate to the deductee), Section 397(3) (payment, statements and the government credit without a challan), Section 401 (bar against direct demand) and Section 465(2)(g) and 465(3)(b) (penalty of Rs. 500 a day, capped at the tax deductible).
7. Income-tax Rules, 2026, notified by Central Board of Direct Taxes Notification No. 22/2026, G.S.R. 198(E), dated 20 March 2026 with effect from 1 April 2026: Rule 215 (Form 130), Rule 219 (Form 138), Rule 204 and Rule 205 (particulars and evidence of claims from an employee) and Rule 245 (Form 168).
8. TRACES portal (tdscpc.gov.in), Directorate of Income-tax (Systems), e-tutorial on downloading Form 16 (Part A and Part B), on generation against a valid PAN only, the non-editable certificate, and the TAN-protected download.