20 March 2026 · 49Tax
How to Read Your Form 16: Every Section Explained
A plain-English breakdown of every part of Form 16 — Part A, Part B, salary details, deductions, and TDS. Know exactly what your employer reported.
What Is Form 16?
Form 16 is a TDS certificate your employer issues after deducting tax from your salary. It is your primary document for filing ITR-1 or ITR-2. It has two parts:
- Part A — TDS details (how much tax your employer deducted and deposited)
- Part B — Income computation (your salary breakup, exemptions, deductions, and tax calculation)
Your employer must issue Form 16 by 15 June after the financial year ends.
Part A: TDS Certificate
Part A is generated from the government's TRACES portal. It contains:
| Field | What It Means |
|---|---|
| Employer TAN | Tax Deduction Account Number of your employer |
| Employee PAN | Your PAN number |
| Period of employment | The months you worked with this employer during the FY |
| Summary of tax deducted | Quarter-wise breakdown of TDS deducted and deposited |
| Acknowledgment numbers | Employer's TDS return filing acknowledgments |
Why Part A Matters
The TDS amounts in Part A must match your Form 26AS and AIS (Annual Information Statement). If they do not match, your refund may get stuck or you may receive a tax notice.
Always cross-check Part A with Form 26AS before filing. If there is a discrepancy, contact your employer's payroll team.
Part B: Income Computation
Part B is where the real information is. Here is a section-by-section breakdown:
1. Gross Salary (Sr. 1)
| Component | Description |
|---|---|
| Salary as per Section 17(1) | Basic salary + DA + all taxable allowances |
| Value of perquisites (Section 17(2)) | Non-cash benefits like company car, rent-free accommodation |
| Profits in lieu of salary (Section 17(3)) | Gratuity, commutation of pension, leave encashment |
The total of these three is your Gross Salary.
2. Less: Exemptions (Sr. 2)
Allowances exempt under Section 10:
| Exemption | Typical Items |
|---|---|
| HRA (Section 10(13A)) | House Rent Allowance — exempt portion based on rent paid, salary, and city |
| LTA (Section 10(5)) | Leave Travel Allowance — actual travel expenses, claimable twice in 4 years |
| Standard deduction (Section 16) | Rs 50,000 (old regime) or Rs 75,000 (new regime) |
| Professional tax (Section 16(iii)) | State-level tax, usually Rs 2,400 – Rs 2,500/year |
3. Net Salary (Sr. 3)
Net Salary = Gross Salary – Exemptions
This is the income from salary that feeds into your total income.
4. Income from House Property (Sr. 4)
If you have declared a home loan to your employer, the interest benefit (up to Rs 2 lakh) shows here as a negative figure, reducing your total income.
5. Income from Other Sources (Sr. 5)
Interest income or other income you may have declared to your employer for TDS purposes.
6. Gross Total Income (Sr. 6)
Gross Total Income = Net Salary + House Property Income + Other Sources
7. Deductions under Chapter VI-A (Sr. 7)
This is where your 80C, 80D, and other deductions appear:
| Section | What It Covers | Limit |
|---|---|---|
| 80C | EPF, PPF, ELSS, LIC, tuition fees, home loan principal | Rs 1,50,000 |
| 80CCC | Pension fund contributions | Included in 80C limit |
| 80CCD(1) | Employee NPS contribution | Included in 80C limit |
| 80CCD(1B) | Additional NPS | Rs 50,000 |
| 80CCD(2) | Employer NPS contribution | No limit (10%/14% of salary) |
| 80D | Health insurance | Rs 25,000 self + Rs 50,000 parents |
| 80E | Education loan interest | No limit |
| 80TTA | Savings account interest | Rs 10,000 |
For a deep dive into 80C, see Section 80C: Complete Guide.
8. Total Taxable Income (Sr. 8)
Taxable Income = Gross Total Income – Chapter VI-A Deductions
This is the amount on which your tax is computed.
9. Tax Computation (Sr. 9–12)
| Line | What It Shows |
|---|---|
| Tax on total income | Computed using the applicable slab rates |
| Surcharge | If income exceeds Rs 50 lakh |
| Health & education cess | 4% on tax + surcharge |
| Relief under Section 87A | Rebate of up to Rs 12,500 (old) or Rs 25,000 (new) if income is within limits |
| Net tax payable | Final tax after rebate and cess |
10. Tax Paid & TDS (Sr. 13–14)
Shows the total TDS your employer deducted during the year. If this exceeds your tax liability, you are entitled to a refund. If it falls short, you have tax due (advance tax or self-assessment tax).
What to Do After Reading Form 16
- Compare with Form 26AS — ensure TDS credits match
- Check deductions — did your employer include all your investment proofs?
- Add any missing income — interest, freelance income, capital gains
- File your ITR — use Form 16 data to complete your return
Upload Form 16 to 49Tax
Instead of manually entering all these numbers, upload your Form 16 to 49Tax. The AI reads every section and populates your return automatically.