Statutory Guides
Form 16 is the annual TDS certificate every Indian employer must give each employee whose salary suffered tax deduction during the financial year. It has two parts. Part A comes from the TRACES portal, Part B comes from your payroll records, and the combined certificate must reach employees by 15 June.
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Your employees read Form 16 as the document that gets their income tax return filed. For you it is the closing entry on a full year of TDS work. Every month you deducted tax from salary and deposited it with the government. Every quarter you filed a Form 24Q return reporting those deductions. Form 16 is the certificate that proves the two tally, employee by employee.
That framing matters because it tells you where Form 16 problems actually start. A certificate that will not generate in June is almost never a June problem. It is a missed challan in August, a PAN typo in a quarterly return, or a Q4 filing that slipped past its due date. If the TDS trail is clean, Form 16 is brisk. If it is not, no amount of last minute effort in the second week of June will rescue it.
| Part | What it contains and where it comes from |
|---|---|
| Part A | Generated on the TRACES portal after your quarterly 24Q returns are processed. It carries a unique certificate number, the PAN and TAN details, and the quarter wise record of tax deducted and deposited. You download it, you do not type it. |
| Part B | Prepared by you from payroll records. Salary breakup, exemptions, deductions claimed by the employee, the regime chosen, taxable income, and tax payable. This is the part where payroll accuracy shows. |
If your team needs the employee side of the story, the plain language guide to what Form 16 means for salaried employees covers reading the certificate and using it in a return.
Form 16 rewards employers who treat it as a year long cadence rather than a June scramble. This is the sequence, start to finish.
Deduct tax on salary each month based on the employee's declared regime and deductions, and deposit it with the government within the due dates for the month. Late deposits accrue interest and surface later as mismatches.
Four statements a year, each reporting the salary paid and the tax deducted in that quarter. These filings are the raw material TRACES uses to build Part A. Errors here, wrong PAN, wrong amount, become errors on the certificate.
The January to March statement closes the year. Part A cannot be generated until this return is filed and processed, which is why the certificate deadline sits a fortnight after it.
Once TRACES processes the Q4 return, download Part A for every employee. In parallel, prepare Part B from payroll, reflecting each person's regime, exemptions, and deductions for the year.
Merge the two parts, sign the certificates, and get them to every eligible employee, including people who resigned partway through the year. The deadline is about the certificate reaching the employee, not sitting generated in a folder.
Most salaried individuals must file their return by 31 July. The gap between the two dates is the breathing room the law gives them, so a late Form 16 eats directly into it.
Reference material for the filings themselves lives on the income tax portal and the TRACES portal.
Late issue or non issue of Form 16 attracts a penalty computed per day, per certificate, under Section 272A(2)(g), capped at the amount of tax that was deductible. The per certificate part is what stings for an employer. One certificate running a month late is an irritant. Forty certificates running a month late is forty separate defaults, each accruing daily.
The softer cost is often larger. Employees waiting on Form 16 for a home loan sanction, a visa file, or the 31 July return deadline do not distinguish between a payroll vendor's delay and their employer's indifference. A certificate that arrives late, or arrives with a mismatch against Form 26AS, converts a routine compliance task into a trust problem inside the company.
The Income Tax Act, 2025 replaced the 1961 Act with effect from the 2026 to 2027 tax year, and with it the certificate has been renumbered. Salary TDS certificates for the 2025 to 2026 financial year were still called Form 16 and were due by 15 June 2026. Certificates covering the current tax year will go out as Form 130, due by 15 June 2027.
Practically, the job stays the same: quarterly salary TDS returns feed a TRACES generated part, the employer prepares the salary detail part, and the combined certificate goes to the employee. What changes is nomenclature and the prescribed formats, so follow the formats published by the tax department when the cycle comes around rather than renumbering old templates by hand. Treat any vendor pushing an early switch with scant patience; the new name applies to next year's certificates.
Offrd's Form 16 module was built for the company that has a CA for filings but does the certificate work in house. You set up the company TAN and PAN once. For each employee you record monthly gross and TDS, and the employee tax declaration captures the regime choice, New or Old, along with HRA, LTA, and Chapter VI A deductions.
The declaration uses a Save and Lock step before Part B can be generated, which keeps a half filled declaration from producing a wrong certificate. Once locked, generate Part B for one employee or in bulk, upload the Part A you downloaded from TRACES, combine the two into the final certificate, and send it to the employee from the platform. No spreadsheet merge, no mail attachment relay.
Pricing follows the rest of Offrd: ₹99 per document on pay per use, or ₹50 per active employee per month on subscription, with 50 free credits on signup and no card required. The module sits beside payroll and the payslip generator, so the numbers on the certificate and the numbers on the monthly payslip come from the same place. The feature detail lives on the Form 16 generation software page, and the wider statutory picture on the HR statutory compliance guide.
One demarcation worth stating plainly: Offrd prepares and distributes the certificates. Filing the quarterly 24Q returns to TRACES remains your CA's job, and Offrd hands over clean payroll data for it.
Every employer that deducted tax at source from salary during the financial year must issue Form 16, one certificate per employee whose pay suffered deduction. Where no tax was deducted at all, a Form 16 is not strictly required, though issuing a salary certificate in the same format is good practice and helps employees with loans and return filing.
Yes. You issue Form 16 covering the months the person worked with you and the tax you deducted in that stretch. An employee who changed jobs during the year will hold two certificates, one from each employer, and will combine both while filing the return.
Form 16 covers tax deducted on salary. Form 16A covers tax deducted on payments other than salary, such as rent, professional fees, contractor payments, and interest. If your company pays a consultant and deducts tax, the consultant receives Form 16A, not Form 16.
No. Part A is generated from the employer's TRACES account, so the certificate has to come from you. Employees can view the tax deducted against their PAN in Form 26AS and in the AIS on the income tax portal, which is how they cross check what you issue.
By 15 June following the close of the financial year. The date sits downstream of the fourth quarter Form 24Q return, due 31 May, because Part A can only be generated on TRACES after that return is processed. For certificates covering the 2026 to 2027 tax year, the due date is 15 June 2027, under the new Form 130 name.
Offrd is trusted by 4,000+ companies across India. Set up TAN and PAN, lock the declarations, and send every Form 16 from one place. 50 free credits on signup, no card needed. An exiting employee's certificate and dues can travel together with the full and final settlement.