Form 16, a certificate issued by an employer to an employee, serves as proof that tax deducted at source (TDS) has been properly collected and deposited with the Income Tax Department.
As the new financial year commenced on 1 April 2025, taxpayers across India are preparing to file their Income Tax Returns (ITRs) for the previous financial year, with the Income Tax Department expected to soon notify the filing forms for 2024-25 (Assessment Year 2025-26). Understanding and preparing essential documents, particularly the updated Form 16, is critical to avoid last-minute complications.
Form 16, a certificate issued by an employer to an employee, serves as proof that tax deducted at source (TDS) has been properly collected and deposited with the Income Tax Department. It is divided into two parts: Part A summarises quarterly tax deductions and deposits, and includes vital personal and employer details; Part B provides a detailed breakdown of salary components, exemptions under Section 10, and deductions under Sections 80C and 80D.
This year, the government has introduced important changes to the structure of Form 16. According to official sources, the revised format offers clearer segregation of tax-exempt allowances, deductions, and taxable salary benefits. Taxpayers will now have better visibility into their income components, reducing errors and confusion during ITR filing.
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, advised, “Taxpayers must stay updated and gather all required documents, including the new Form 16, to ensure timely and accurate filings.”
Moreover, financial institutions often consider Form 16 as proof of income when processing loan applications. It is also essential for claiming TDS refunds where applicable. For employees who have changed jobs during the year, collecting Form 16 from all employers remains crucial.
The Income Tax Department is expected to release filing forms and further guidance shortly. Tax experts recommend that salaried taxpayers familiarise themselves with these changes promptly to ensure compliance and avoid penalties.
