Form 16 Becomes Form 130: What Employers and Employees Should Expect

What is changing, in one view

Form 16, the annual TDS certificate every salaried employee knows, is being replaced. Under the Income Tax Rules, 2026 that accompany the new Act, the salary TDS certificate becomes Form 130. It certifies the same thing, salary paid and tax deducted and deposited, but under the new law and with a revised structure.

It is not just the certificate. A set of related payroll forms have been renumbered too, and getting any of them wrong from April 2026 creates real filing problems. Here is the full mapping in one place:

Form 130: the new three-part structure

The old Form 16 had two parts: Part A (from TRACES, with employer and employee details and the TDS summary) and Part B (the salary computation, often prepared separately by the employer's payroll software). That split sometimes caused mismatches between the two.

Form 130 adds a third part to tighten this up. It carries the same authenticated TRACES data and salary computation, but with a more structured layout, gross salary, perquisites, allowances, exemptions and deductions, set out in detail. Part C requires an accurate salary breakdown, which makes payroll precision more important than before.

Form 130 also closes an old gap. Specified senior citizens aged 75 and above, who authorise their bank to deduct tax on pension and interest income, previously received no standard certificate because Form 16 was salary-only. Now the bank issues Form 130 with an annexure covering that pension and interest income.

The payroll forms behind it

Two of the renumbered forms matter most because they feed the certificate:

• Form 138 (was 24Q) is the quarterly salary TDS return. This is the one that generates Form 130 on TRACES. Filing the old Form 24Q for Tax Year 2026-27 is non-compliant, and it will prevent Form 130 from being generated at all.
• Form 124 (was 12BB) is the declaration employees give their employer at the start of the year, rent for HRA, home-loan interest, and Chapter VI-A (now Section 123-series) deductions. Payroll teams collect this on the new form from April 2026.

Because Form 130 is generated only after the quarterly return is processed, the two are linked: file Form 138 correctly and on time, and Form 130 follows. Our TDS compliance service handles the quarterly returns and certificate generation so this chain does not break.

For employees: what to do

For salaried taxpayers, the change is mostly a matter of awareness. A short checklist:

• Expect Form 130, not Form 16, for Tax Year 2026-27 (the certificate you receive in 2027). For your FY 2025-26 income, you still get the familiar Form 16 by June 2026.
• Verify it the same way you always did, salary, TDS deducted and exemptions, and cross-check against Form 168 (the new Form 26AS) so your TDS credits match.
• Submit your declaration on Form 124 (replacing Form 12BB) to claim HRA, home-loan interest and deductions through payroll.
• If you changed jobs during the year, collect a separate Form 130 from each employer, exactly as you did with Form 16.

For employers and payroll teams

This is where the real work sits. The transition demands action before the first quarterly filing of Tax Year 2026-27:

• Switch to Form 138 for quarterly salary TDS returns immediately. Filing Form 24Q for the new year is non-compliant and blocks Form 130 generation.
• Update payroll software. Confirm with your vendor that the system generates Form 130 and files Form 138, and that section codes reference the new 392 and 393.
• Collect declarations on Form 124 from employees for the new year.
• Issue Form 130 only through TRACES. Offline issuance is not permitted.
• Reconcile April payroll carefully. March 2026 payments fall under the old Act, April 2026 under the new, so the boundary needs a clean split.

The transition timeline

The rule that prevents most mistakes is the same one that governs the whole Act: which system applies depends on when the salary was paid.

• FY 2025-26 (up to 31 March 2026): old Act. Employers issue the familiar Form 16 by 15 June 2026, and file Form 24Q. A correction for this period stays on the old forms.
• Tax Year 2026-27 (from 1 April 2026): new Act. Quarterly returns are filed on Form 138, and the certificate issued in 2027 is Form 130.

Do not file a FY 2025-26 correction on a new form, and do not issue a Tax Year 2026-27 certificate as Form 16. The boundary is 31 March 2026, and the forms follow the payment date, not the filing date.

Quick answers

Is Form 16 gone? It is replaced by Form 130 from Tax Year 2026-27; Form 16 is still issued for FY 2025-26 by June 2026. What replaced Form 24Q? Form 138, the quarterly salary TDS return. What about Form 12BB? It is now Form 124, the employee declaration. Can Form 130 be issued offline? No, it must come through TRACES. Does my TAN change? No, only the form numbers change, not your registration. If your payroll needs to be ready for the switch, our payroll service and TDS compliance service handle it end to end.