Form 16
The annual TDS certificate an employer must issue to every employee, summarizing the salary paid and the tax deducted and deposited on their behalf during the year.
What it is
Form 16 is a certificate issued by an employer to an employee under Section 203 of the Income Tax Act, certifying the salary paid and the TDS deposited with the government on that employee's behalf for a given financial year. It has two parts: Part A, containing the employer's TAN, the employee's PAN, and a quarterly summary of tax deducted and deposited (generated from the government's TRACES portal); and Part B, containing a detailed breakup of salary, exemptions, deductions claimed, and the final tax computation.
Who receives it, and when
Any employee from whose salary tax has been deducted during the financial year is entitled to a Form 16, and the employer is legally required to issue it. Employers typically issue this after the financial year closes and after their own TDS returns are processed, generally by mid-June — though it's worth checking the current due date each year, since compliance deadlines can shift by CBDT circular.
Why it matters
Form 16 is the single most-used document employees rely on to file their income tax returns — it consolidates salary and TDS information they'd otherwise have to reconstruct from payslips and bank statements. For employers, timely and accurate Form 16 generation is also a strong signal, to employees and auditors alike, that payroll TDS was calculated and deposited correctly throughout the year.