When it comes to the discussion of salary and the income tax in India, two terms are very common: Form 16 and Form 24Q.
Both are related to the concept of TDS viz., Tax Deducted at Source on salary, but they both serve different purposes. Form 16 is more important for the employees, while Form 24Q is important for the employers.
In this blog, let’s understand what they mean, how they work, and the key differences between the two.
What is Form 16?
Form 16 is basically a TDS certificate that an employer gives to their employee. It reflects the total salary paid and the TDS deducted during a financial year.
If TDS has been deducted from an employee’s salary, the employer must issue Form 16.
Contents of Form 16
- Part A
- Name & address of employer and employee
- PAN of employee & TAN of employer
- Assessment year
- Period of employment
- Summary of salary paid and TDS deducted
- Details of TDS deposited (linked to Form 24Q)
- Part B
- Salary breakup
- Exemptions (HRA, LTA, etc.)
- Deductions (80C, 80D, etc.)
- Relief under Section 89 (if any)
- Taxable income and tax payable
Why Form 16 is Important?
- Proof of income and tax deduction
- Helps in filing Income Tax Returns (ITR)
- Useful as income proof for loans and visa applications
- Helps employees plan future taxes and savings
What is Form 24Q?
Form 24Q is a quarterly TDS return that the employer files with the Income Tax Department. It reports the TDS deducted from employees’ salaries and deposited with the government.
Features of Form 24Q
- Filing frequency: Quarterly (Apr–Jun, Jul–Sep, Oct–Dec, Jan–Mar)
- Structure:
- Annexure I: Details of TDS deducted/deposited for each employee (all four quarters)
- Annexure II: Salary breakup, exemptions, deductions, and tax for each employee (only in Q4). This data is used to prepare Form 16.
Due Dates for Filing Form 24Q
- Q1 (Apr–Jun): 31st July
- Q2 (Jul–Sep): 31st October
- Q3 (Oct–Dec): 31st January
- Q4 (Jan–Mar): 31st May
Why Form 24Q is Important?
- Mandatory compliance for employers
- Ensures employees get the correct TDS credit
- Basis for generating Form 16
- Avoids disputes with employees regarding tax deduction
Key Differences Between Form 16 and Form 24Q
| Aspect | Form 16 | Form 24Q |
| Nature | TDS certificate | Quarterly TDS return |
| Purpose | Shows salary and TDS details to employees | Reports TDS to the Income Tax Department |
| Filed/Issued By | Employer issues to employee | Employer files with IT Department |
| Beneficiary | Employee | Income Tax Department |
| Periodicity | Annually | Quarterly |
| Content | Salary, deductions, exemptions, tax | Employee details, TDS, salary breakup (in Q4) |
| Dependency | Based on Form 24Q data | Source for Form 16 |
| Legal Requirement | Must be given to employees | Must be filed if TDS is deducted |
Relationship Between Form 16 and Form 24Q
Form 16 is created from the data in Form 24Q.
- Employer first files Form 24Q every quarter.
- In Q4, Annexure II has detailed salary and tax data for each employee.
- Based on this, Form 16 is prepared and given to employees.
In short: Form 24Q is the source, and Form 16 is the result.
Due Dates and Penalties
- Form 16
- Must be issued by 15th June of the next financial year
- Penalty: ₹100 per day (max up to TDS amount)
- Form 24Q
- Must be filed quarterly (31st July, 31st October, 31st January, 31st May)
- Late fee: ₹200 per day until return is filed
- Penalty: ₹10,000 to ₹1,00,000 for wrong or non-filing
Why This Difference Matters?
- For Employers
- Filing Form 24Q on time ensures compliance and avoids penalties.
- Accurate filing helps employees get correct Form 16.
- Builds trust with employees and avoids legal issues.
- For Employees
- Form 16 makes ITR filing simple and hassle-free.
- It helps in verifying whether the TDS deducted by the employer has actually been deposited (via Form 26AS).
- Plays an important role in financial planning and loan approvals.
Common Mistakes Employers Should Avoid
- Mismatch of PAN details – Wrong PAN of employees can delay credit of TDS.
- Late filing of Form 24Q – Leads to heavy penalties.
- Not issuing Form 16 on time – Causes difficulty for employees in filing ITR.
- Errors in salary breakup – May result in wrong tax computation and employee disputes.
Employers should use TDS filing software or professional help to avoid such mistakes.
Example
Suppose Mr. Rajesh earns ₹8,00,000 in FY 2024-25. His employer deducts TDS of ₹40,000.
- Employer files Form 24Q every quarter, reporting Rajesh’s salary and TDS.
- In Q4, Annexure II contains his full salary details, exemptions, and tax calculation.
- Using this data, the employer issues Form 16 by 15th June 2025.
- Rajesh then uses Form 16 to file his ITR.
Best Practices for Employers and Employees
For Employers
- Timely filing – Always file the Form 24Q on or before the prescribed due dates to avoid the various penalties.
- Accuracy of data – Always ensure the accurate and correct employee PAN, salary details and TDS amount are given.
- Use digital tools – TDS filing software or professional services can minimize errors.
- Employee communication – Inform employees about their tax deductions regularly instead of waiting until year-end.
For Employees
- Cross-check Form 16 with Form 26AS – This ensures the TDS reflected in Form 16 aligns with what the government has received.
- Keep Form 16 safe – It serves as the official income proof for future needs such as loans, credit cards or visa applications.
- Verify deductions – Check that deductions like 80C, 80D, etc., are correctly provided.
- Use Form 16 wisely – It not only helps in ITR filing but also in planning tax-saving investments for the next year.
By following these given practices, both employers and employees can avoid unnecessary stress and delay during tax season.
Conclusion
Form 16 and Form 24Q are very closely linked but serve different purposes.
- Form 24Q → Filed by employers with the Income Tax Department.
- Form 16 → Issued to employees based on Form 24Q.
For employees, Form 16 is essential for filing tax returns. For employers, filing Form 24Q correctly and on time ensures compliance and smooth issuance of Form 16.
By understanding the difference, both employees and employers can avoid mistakes, stay compliant, and ensure smooth tax filing every year.
