Form 16 is a TDS certificate on salary. It contains details of income earned and the taxes deducted.
The employer deducts TDS and deposits it with the government when the employee's salary is above INR 2.5 Lakh in the financial year. Form 16 is a summary of your salary income as reported to the Income Tax Department.
Form 16 is divided into two parts: PART A and PART B.
- Form 16 - Part A contains details of TDS deducted by your employer and the details of employer, taxpayer, salary and TDS deducted.
- Form 16 - Part B is a breakdown of the components under income head of Salary. It contains details of your allowances, prerequisites, bonus, deduction, taxable income and tax payable.
From FY 2018-19 onwards Form 16 will be issued in a standardized format prescribed by the government. See the sample Form 16.