Form 16 Decoded: How to Read It Before Filing Your ITR

Form 16 is the certificate your employer gives you showing the salary they paid and the tax they deducted (TDS). It has two parts — Part A and Part B — and they tell you different things.

Part A — the TDS certificate

This is downloaded from TRACES portal and is authenticated by a digital signature. Key fields: - Employer TAN — identifies the deductor - PAN of employee (you) — must match your actual PAN exactly - Period — FY dates (e.g., 01-Apr-2025 to 31-Mar-2026) - Summary of tax deducted and deposited quarter-wise

This is what gets reflected in your Form 26AS and AIS. If amounts don't match → employer didn't deposit TDS to government → you have a problem.

Part B — the salary breakup

This is the detailed breakdown:

1. Gross salary — everything your employer paid (basic + HRA + special allowance + bonus + perquisites) 2. Allowances exempt under Section 10 — HRA exemption, LTA, transport etc. 3. Deductions under Section 16 — standard deduction (₹75,000 for new regime, ₹50,000 for old), professional tax 4. Income chargeable under salary — (1) − (2) − (3) 5. Other income reported to employer (rental income, savings bank interest etc.) 6. Gross total income 7. Deductions under Chapter VIA — 80C, 80D, 80CCD, etc. 8. Total income (rounded to nearest ₹10) 9. Tax on total income 10. Rebate under 87A, cess, surcharge 11. Net tax payable 12. Total TDS deducted

The 4 numbers to verify

Before e-filing your ITR, cross-check:

1. Gross salary (Part B.1) — match to your salary slips total 2. HRA exemption (Part B.2) — confirm the number matches your rent receipts calculation 3. 80C deductions (Part B.7) — confirm the ₹1.5L or lower amount matches what you actually invested 4. TDS deducted (Part B.12) — must match Part A total AND match Form 26AS

If any of these four don't match, do NOT file. Talk to your employer's payroll team first.

What if you have two Form 16s (job change)

You must combine both. Your total tax liability is computed on the aggregate income, not per employer. Often means extra tax to pay at filing because each employer gave you the full standard deduction and basic exemption separately.

The common trap

Employees who declared ₹1.5L of 80C to payroll but actually invested only ₹80K at year-end get a nasty surprise: their Form 16 shows tax based on ₹1.5L deduction. When they file correctly (₹80K only), they owe extra tax + interest under Section 234.

Use our Income Tax Calculator to verify before filing.