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Employers will soon issue Form 16, as they are mandated to do so by June 15.
Salaried individuals must understand how to use this document effectively while
filing their income tax returns (ITRs).

Significance of Form 16

Form 16 is a key document for salaried individuals. “It serves as an essential certificate of tax deducted at source (TDS) on salary income by the employer,” says Suresh Surana, a Mumbai-based chartered accountant.

It consolidates salary income, deductions, and taxes. “It simplifies the tax filing process by making all the relevant data readily available,” says Shefali Mundra, tax expert at ClearTax. Form 16 comprises Part A and Part B. Part A contains the employer’s tax deduction account number (TAN), the employee’s permanent account number (PAN), and a quarterly summary of salary paid and TDS deposited.
Part B includes a breakdown of salary, allowances, perquisites, and deductions under Chapter VI-A (e.g., Sections 80C, 80D, etc.). “It also reflects the computation of total income and tax liability based on applicable slabs,” says Surana.

The income tax portal allows auto-population of ITR forms using Form 16 data.  “Such imported information should be carefully cross-verified with the employee’s pay slips to ensure consistency in salary components, deductions, and exemptions,” says Surana.

Role of Form 26AS

Form 26AS, generated by the Income Tax Department, provides a consolidated view of all tax credits linked to the taxpayer’s PAN, including TDS from various sources, such as banks, financial institutions, and even buyers in property transactions. It also reflects advance tax payments, self-assessment tax, and refund details. “It serves as a centralised view of all tax credits available to a taxpayer. It is crucial for verifying that taxes deducted have actually been deposited with the government,” says Mundra.

Many employees do not report income from fixed deposits or freelance work to their employer. “As a result, this income, though taxed via TDS and reflected in Form 26AS, is missing from Form 16. If this income is not reported in the ITR, it can trigger income tax notices, delayed refunds, or additional tax demands,” says
Mundra.

Surana adds that cross-verification also helps verify any other income or high- value transaction reported in Form 26AS that needs to be disclosed in the return.

Addressing mismatches

TDS mismatches may occur between Form 16 and Form 26AS. “An incorrect PAN in the employer’s records may lead to missing TDS entries in Form 26AS. Mismatches could also happen due to incorrect TDS deposits by the employer,” says Santhosh Sivaraj, partner, global employer services, tax & regulatory services, BDO India.

Verify that your PAN is correctly recorded in your employer’s records. “If there is a mismatch, contact your HR or payroll team and have your employer revise the TDS return with the updated details,” says Sivaraj. Once revised, the data will reflect in Form 26AS.

Handling errors in Form 16

Form 16’s accuracy depends entirely on the correctness of the data fed into it. “Errors may include incorrect PAN details, omission of deductions due to missing proofs, wrong calculation of HRA or LTA exemptions, or incorrect tax computation. Sometimes the employer might employ an incorrect tax slab or fail to adjust for
previous employment income,” says Amit Baid, head of tax, BTG Advaya. For issues in either Part A or Part B, contact the employer’s HR or payroll team. “For errors in Part A, which relate to TDS details generated through TRACES, the employer will need to correct the errors by filing a revised TDS return. For errors in Part B, which has the salary computation and break up prepared by the employer, the payroll or HR team should be approached directly to issue a revised Form 16,” says Baid. Sivaraj says rectification generally takes 15–20 working days depending on the employer’s internal processes, and the time taken by the TRACES portal to reflect the updated data.

Claiming missed deductions

Deductions missed in Form 16 can still be claimed while filing ITR. “If you missed submitting investment or expense proofs to your employer, you can still claim eligible deductions on your returns. Just make sure you keep supporting documents handy in case of any future scrutiny,” says Baid

Job switch and multiple Form 16s

• When an employee changes jobs within a financial year, each employer issues a Form 16
• Collect them from all employers
• Review Form 16s against monthly pay slips
• Consolidate salary income and TDS from all employers when filing ITR
• Claim deductions under sections like 80C, 80D, and HRA only once