TDS on salary & Form 16 in India, 2026 guide
Form 16, Form 12BB, Form 24Q and Form 26AS, the four-form ecosystem that runs salary TDS in India. Plus old vs new tax regime slabs for FY 2026-27 for Mumbai HR & payroll teams.
Employers deduct income tax on salary (TDS) under Section 192 of the Income Tax Act. Four forms matter: Form 12BB (employee declares investments + HRA + LTA), Form 24Q (employer's quarterly TDS return), Form 16 (annual TDS certificate to employee, due by 15 June), and Form 26AS / AIS (employee's tax credit statement on the IT portal). Tax computed under the employee's chosen regime: old (with deductions) or new (lower slabs).
How salary TDS actually flows in India
Each form fits a different role between the employer, employee and the Income Tax Department.
Form 12BB
Statement of investment proofs the employee submits at the start of the year (and again before year-end) so the employer computes correct TDS.
- HRA exemption: rent paid, landlord PAN if rent > ₹1L/year
- LTA claim: travel bills for the eligible block
- Deductions: 80C investments, 80D health insurance, 80E education loan, home loan interest u/s 24(b)
Form 24Q
Quarterly e-TDS return on salaries. Filed via TIN-NSDL/TRACES, captures TDS deducted and deposited for every employee.
- Frequency: 4 returns per FY (one per quarter)
- Due dates: 31 July, 31 Oct, 31 Jan, 31 May (Q4)
- Annexure II at Q4: annual salary breakup per employee
Form 16
Annual TDS certificate that the employer must issue to every salaried employee. The single most important document for filing income tax return.
- Due date: 15 June following the financial year
- Part A: TDS deducted and deposited (TRACES-generated)
- Part B: salary breakup, deductions, tax computed
Form 26AS & AIS
The tax credit statement the employee downloads from the income tax portal. Use it to verify TDS reported by the employer matches what was deposited.
- 26AS: consolidated TDS, TCS, advance tax, refunds
- AIS: Annual Information Statement, broader (interest, dividends, MF, real estate, etc.)
- Access: incometax.gov.in > e-File > Income Tax Forms
Part A and Part B explained
Two parts. Part A comes from the government's TRACES portal. Part B is prepared by the employer.
A Part A (TRACES-generated)
- Employer TAN, PAN, name, address
- Employee PAN, name, address
- Period of employment in the FY
- Summary of TDS deducted and deposited, quarter-wise
- BSR code, challan numbers and dates of deposit
- Digital signature of the deductor
B Part B (Employer-prepared)
- Detailed salary breakup: basic, DA, HRA, LTA, perquisites, profits in lieu
- Exemptions claimed: HRA exemption, LTA exemption, gratuity, leave encashment
- Deductions: standard deduction, professional tax, deductions under Chapter VI-A (80C, 80D, 80CCD, 80E, 80G, etc.)
- Total taxable income, tax payable, surcharge, cess, rebate u/s 87A
- Tax deducted, balance refund or payable
FY 2026-27 (AY 2027-28) tax slabs: old vs new
Employees choose the regime that gives lower tax. New is now the default unless the employee opts out.
New regime (default)
Standard deduction: ₹75,000 · 87A rebate up to ₹12L taxable income
| Taxable income slab | Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 - ₹8,00,000 | 5% |
| ₹8,00,001 - ₹12,00,000 | 10% |
| ₹12,00,001 - ₹16,00,000 | 15% |
| ₹16,00,001 - ₹20,00,000 | 20% |
| ₹20,00,001 - ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Old regime (opt-in)
Standard deduction: ₹50,000 · allows 80C, 80D, HRA, LTA, home loan interest
| Taxable income slab | Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 - ₹5,00,000 | 5% |
| ₹5,00,001 - ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
| 87A rebate | Up to ₹12,500 (income up to ₹5L) |
| Surcharge | 10% (₹50L+), 15% (₹1Cr+), 25% (₹2Cr+) |
| Cess | 4% on tax + surcharge |
Per the Budget 2025 changes, Section 87A rebate makes new-regime tax zero up to ₹12 lakh taxable income (effectively ₹12.75L gross after standard deduction of ₹75k). Above that, full slab tax applies. Old regime 87A rebate remains capped at ₹5 lakh.
TDS compliance calendar for the year
Mark these in your HR system. Late filing attracts interest under Section 201(1A) and late-fee under Section 234E.
Monthly TDS deposit
Of every month, for tax deducted in the prior month. (April TDS is deposited by 7 May.)
Q1 Form 24Q
Quarter ending 30 June salary TDS return.
Q2 Form 24Q
Quarter ending 30 September salary TDS return.
Q3 Form 24Q
Quarter ending 31 December salary TDS return.
Q4 Form 24Q
Quarter ending 31 March, includes annual Annexure II breakup.
Form 16 issuance
To every salaried employee, post Q4 return filing.
Employee ITR
Income tax return filing deadline for salaried individuals (non-audit cases).
Form 12BB cycle
Employees submit investment proof declaration for the new FY.
TDS & Form 16 FAQs
What is Form 16?
Form 16 is the annual TDS certificate that an employer issues to a salaried employee under Section 203 of the Income Tax Act. It shows total salary paid, exemptions, deductions, taxable income and TDS deducted during the financial year. Employees use Form 16 to file their income tax return.
What is the due date to issue Form 16?
By 15 June immediately following the financial year. For FY 2026-27 (1 April 2026 - 31 March 2027), Form 16 must be issued by 15 June 2027. Late issuance attracts ₹100 per day per employee under Section 272A(2)(g).
What is the difference between Form 16, Form 16A and Form 16B?
Form 16 is for salary TDS under Section 192. Form 16A is for TDS on non-salary income (contractor fees, interest, rent above ₹50k/month etc.) under Sections 194 series. Form 16B is for TDS on sale of immovable property under Section 194-IA.
How does an employee download Form 16?
The employer downloads Part A from the TRACES portal (tdscpc.gov.in) after filing the Q4 Form 24Q, then prepares Part B and shares the consolidated PDF with the employee, usually via the HRMS or email. Employees cannot download Form 16 directly from any government portal.
What is the new tax regime for FY 2026-27?
The new (default) regime offers lower slab rates with no deductions/exemptions, except a standard deduction of ₹75,000 and a Section 87A rebate up to ₹12 lakh taxable income. Most salaried employees in Mumbai under ₹15L gross prefer the new regime.
When should an employee submit Form 12BB?
At the start of the financial year (typically by 30 April), then again before year-end (typically by 31 January) with actual investment proofs. The employer uses these declarations to compute correct TDS through the year. Without Form 12BB, employer assumes nil exemptions/deductions.
What if Form 26AS shows lower TDS than Form 16?
Form 26AS is the authoritative tax credit statement. If 26AS is lower, the employer may have deducted but not deposited some TDS. Contact HR to fix this before filing the ITR. ITR credit will only be allowed for TDS reflected in 26AS, regardless of Form 16.
What is the penalty for late TDS deposit?
Interest under Section 201(1A): 1% per month from date deducted to date deposited (for late deduction), and 1.5% per month from date deducted to date deposited (for delayed deposit). Late filing of return attracts ₹200/day late fee under Section 234E.
Related Maharashtra guides
Form 16, 24Q, 12BB on autopilot
factoHR payroll auto-collects Form 12BB declarations, computes TDS under both regimes, files Form 24Q quarterly, generates Part A from TRACES and issues Form 16 PDFs to every employee by 15 June. Zero spreadsheets, zero penalties.