TDS on Salary: Form 16 Explained (Part A & Part B)

Every salaried employee sees tax deducted from their monthly pay slip, but few understand exactly how it's calculated or what the certificate their employer hands over actually means. This guide breaks down TDS on salary under Section 192 and explains, section by section, what belongs in Form 16 Part A and Part B — and how to use it correctly when filing your return.

How TDS on Salary Works — Section 192

Under Section 192 of the Income Tax Act, every employer paying salary above the basic exemption threshold must deduct tax at source. Unlike TDS on other payments (which is usually a flat rate), salary TDS is calculated using the employee's estimated total tax liability for the year:

1. At the start of the year (or when you join), the employer estimates your annual salary.
2. You declare your chosen regime and any deductions/exemptions (HRA, 80C investments, home loan interest, etc.) via an investment declaration.
3. The employer computes your estimated annual tax liability based on the applicable slab rates.
4. That annual liability is divided across the remaining months and deducted proportionally from each month's salary.
5. At year-end, based on actual investment proofs submitted, the employer recalculates and adjusts TDS in the final months (usually January-March) if there's a shortfall or excess.

This is why your take-home pay often changes slightly in the last quarter of the financial year — it reflects the true-up between estimated and actual tax.

What Is Form 16?

Form 16 is the TDS certificate your employer is required to issue once tax has been deducted from your salary during the financial year. It serves as proof of income earned and tax deducted, and is one of the primary documents used to file your ITR. It has two distinct parts, generated differently and serving different purposes.

Form 16 Part A — TDS Deposit Summary

Part A is generated and downloaded by the employer from the TRACES portal (TDS Reconciliation Analysis and Correction Enabling System), not created manually. It contains:

• Employer's name, address, and TAN (Tax Deduction Account Number)
• Employee's name, address, and PAN
• Employment period covered
• Quarter-wise summary of tax deducted and deposited with the government
• An acknowledgement number for each TDS return filed

Because Part A comes directly from TRACES using government records, it should match what appears in your Form 26AS.

Form 16 Part B — Salary & Tax Computation

Part B is prepared by the employer (not downloaded from TRACES) and gives the full picture of how your tax was arrived at:

• Detailed salary breakup — basic, HRA, special allowance, perquisites, bonus
• Exemptions claimed under Section 10 (like HRA, LTA)
• Deductions under Chapter VI-A (80C, 80D, 80CCD, etc.) if you opted for the old regime
• Standard deduction applied
• Taxable salary and the final tax computation, including cess and any rebate applied
• Regime under which TDS was computed (old or new)

Comparing Part A and Part B

When Must Form 16 Be Issued?

Employers must issue Form 16 by 15 June following the end of the financial year in which tax was deducted, giving employees ample time before the ITR filing deadline. If you changed jobs during the year, request Form 16 from each employer you worked for — you'll need to combine the salary and TDS details from all of them while filing.

Verifying Form 16 Against Form 26AS and AIS

Before filing your ITR, always cross-check the TDS figures in Form 16 Part A against your Form 26AS and Annual Information Statement (AIS), both downloadable from the income tax e-filing portal. Common mismatches to watch for:

• TDS shown in Form 16 but missing in 26AS — usually means the employer deducted tax but hasn't deposited it or filed the TDS return yet.
• PAN errors — an incorrect PAN quoted by the employer means the credit doesn't reflect against your PAN in 26AS.
• Quarter mismatch — TDS deducted in one quarter but reported in a later TDS return, causing a temporary gap.
• Additional income in AIS — interest, dividends or other income that Form 16 naturally won't cover, since it only reports salary.

If the TDS credit doesn't reflect in 26AS by the time you file, contact your employer's payroll/finance team to confirm the TDS return has been filed — claiming a TDS credit not visible in 26AS can trigger a mismatch notice later.

What If Your Employer Doesn't Issue Form 16?

If your employer delays or fails to issue Form 16, you can still file your ITR using your salary slips and Form 26AS/AIS as the basis for reporting income and claiming TDS credit. Employers who deducted TDS but fail to issue Form 16 are technically in default and can face a penalty for non-issuance, but that doesn't stop you from filing on time using the underlying data. Do not delay your own ITR filing while waiting for a late Form 16 — the filing deadline is independent of when your employer issues the certificate.

Frequently asked questions

What is the difference between Form 16 Part A and Part B?

Part A is a TDS deposit summary generated from TRACES, showing your employer's TAN, PAN, and quarter-wise tax deducted and deposited. Part B is prepared by the employer and contains the detailed salary breakup, exemptions, deductions claimed, and the final tax computation.

By when must an employer issue Form 16?

Employers are required to issue Form 16 by 15 June following the end of the financial year in which the tax was deducted, provided TDS was deducted from your salary during the year.

Can I file my ITR without Form 16?

Yes. Form 16 is a convenience document, not a legal requirement to file. You can reconstruct your salary income and taxes paid using your salary slips, Form 26AS, and AIS, and file your return on that basis.

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