Every June, employers across India issued Form 16 to their employees. Employees used it to file their ITR, apply for home loans, and prove their income to banks and lenders. It was the single most recognised tax document in the hands of the Indian salaried class.

From Tax Year 2026-27 onwards, Form 16 no longer exists for salary TDS purposes. It has been replaced by Form 130 under the Income Tax Rules, 2026. The legal basis has changed, the structure has changed, and the quarterly return that feeds the certificate has changed.

This blog covers everything salaried employees, employers, HR teams, and payroll managers need to know about Form 130 — what changed, what stayed the same, and what must be done before June 2027.

Part 1 — What Was Form 16

Part 2 — What is Form 130

Part 3 — Form 16 vs Form 130: Complete Comparison

Part 4 — What Changed in Detail

Change 1: Three-Part Structure

The most significant structural change is the addition of a third part. Old Form 16 had Part A (from TRACES — employer/employee details and TDS summary) and Part B (salary computation — often prepared by the employer separately). This split caused mismatches — Part B was sometimes prepared by the employer’s payroll software without full alignment with the TRACES data in Part A.

Form 130’s three-part structure integrates this more cleanly. Part A covers deductor and deductee details. Part B provides a comprehensive quarter-wise TDS reconciliation pulled directly from Form 138 returns. Part C contains either the detailed salary computation (Annexure I) for employees or the pension/interest computation (Annexure II) for specified senior citizens.

Change 2: Employment Period Now a Mandatory Field

Form 130 Part A includes a new mandatory field — the employment period: from (dd/mm/yyyy) to (dd/mm/yyyy). This field was not present in Form 16. It captures the exact period during which the employee worked with that employer during the Tax Year.

This change is particularly important for employees who changed jobs during the year. Each employer issues a separate Form 130 for their period of employment. The new employment period field makes it clear exactly which period each certificate covers, reducing confusion when employees receive multiple certificates from different employers.

Change 3: Senior Citizens Now Covered via Form 130

Under the old system, specified senior citizens (75 years and above) who had authorised their bank to deduct full tax on their interest income did not receive Form 16 from their bank — because Form 16 was only for salary. This created a gap where senior citizens had TDS deducted but no standard certificate to reflect it.

Form 130 closes this gap. Specified banks are now required to issue Form 130 with Annexure II to eligible senior citizens for TDS deducted on pension and interest income. The same due date applies — 15 June of the following year.

Change 4: Form 24Q Replaced by Form 138

Form 130 is generated from the TRACES portal after the employer files quarterly TDS returns. Under the old system, the quarterly return for salary TDS was Form 24Q. Under the new system, it is Form 138. This is the return that feeds Form 130 — if Form 138 is not filed correctly, Form 130 cannot be generated or may contain errors.

If your payroll team is still filing quarterly salary TDS returns as Form 24Q for Tax Year 2026-27, those returns are non-compliant. The correct form from Q1 Tax Year 2026-27 (April-June 2026) onwards is Form 138.

Change 5: Cross-Reference with Form 168 (New Form 26AS)

Form 26AS has been replaced by Form 168 — called the Tax Passbook — under the Income Tax Act, 2025. Before filing an ITR for Tax Year 2026-27, every salaried employee should compare the TDS figures shown in their Form 130 Part B against Form 168. Both documents are system-generated from TRACES and should match. Any mismatch must be resolved with the employer before ITR filing — not after.

Part 5 — Timeline: What Happens When

Part 6 — Action Checklist

For Employers and HR/Payroll Teams

1. Stop filing Form 24Q for salary TDS from Tax Year 2026-27. File Form 138 for all four quarters.
2. Update payroll software to generate Form 130 (not Form 16) for Tax Year 2026-27 salary.
3. Ensure Form 130 captures all three parts — especially the employment period field in Part A.
4. Issue Form 130 to all employees by 15 June 2027 — downloaded from TRACES only.
5. For employees who left during the year — issue Form 130 covering their exact employment period.
6. For multiple employers in the same Tax Year — each issues separate Part A and Part B.

For Salaried Employees

• Do not expect Form 16 from your employer for Tax Year 2026-27 salary. You will receive Form 130.
• Download Form 168 (new Form 26AS) from the income tax portal before filing your ITR.
• Cross-check Form 130 Part B TDS figures against Form 168 — resolve any mismatch before filing.
• If you changed jobs during Tax Year 2026-27 — collect Form 130 from each employer.
• Banks and lenders may still ask for “Form 16” — clarify that Form 130 is the equivalent under new Act.

Key Takeaways

• Form 16 is replaced by Form 130 for salary TDS certificates under the Income Tax Act, 2025, with effect from Tax Year 2026-27.
• Legal basis: Section 395(4)(b) of IT Act 2025 read with Rule 215(1) of IT Rules 2026. Old basis was Section 203 + Rule 31.
• Form 130 has three parts vs two in Form 16 — Part A (details), Part B (TDS reconciliation), Part C (salary computation or pension annexure).
• New field in Form 130: Employment period (from/to dates) — mandatory in Part A.
• Quarterly TDS return: Form 138 replaces Form 24Q from Q1 Tax Year 2026-27.
• Due date unchanged: Issue Form 130 by 15 June of the year following the Tax Year.
• TRACES portal only — Form 130 generated only after Form 138 is filed. Offline versions invalid.
• Form 26AS replaced by Form 168 (Tax Passbook) — cross-check before ITR filing.
• FY 2025-26 salary: Form 16 still applicable, issued by 15 June 2026. No change for this cycle.

Frequently Asked Questions

This article is published for general informational and educational purposes only and does not constitute legal, tax, or professional advice. The provisions of the Income Tax Act, 2025, Income Tax Rules, 2026, and related CBDT notifications are subject to amendment at any time. Form numbers, section references, due dates, and procedural details mentioned in this article reflect the law as understood on the date of publication and may not reflect subsequent amendments or clarifications. Readers are strongly advised to verify all provisions from the official Income Tax portal (incometax.gov.in), TRACES portal (tdscpc.gov.in), and consult a qualified Chartered Accountant before making any compliance or payroll decisions. For professional support, contact us at info@fimaco.in or visit fimaco.in.