ABSTRACT GRB 160325A is the only bright burst detected by AstroSat CZT Imager in its primary field of view to date. In this work, we present the spectral and polarimetric analysis of the prompt emission of the burst using AstroSat, Fermi, and Niel Gehrels Swift observations. The prompt emission consists of two distinct emission episodes separated by a few seconds of quiescent/ mild activity period. The first emission episode shows a thermal component as well as a low polarization fraction of $PF \lt 37\, {{\ \rm per\ cent}}$ at $1.5\, σ$ confidence level. On the other hand, the second emission episode shows a non-thermal spectrum and is found to be highly polarized with $PF \gt 43\, {{\ \rm per\ cent}}$ at 1.5σ confidence level. We also study the afterglow properties of the jet using Swift/XRT data. The observed jet break suggests that the jet is pointed towards the observer and has an opening angle of 1.2° for an assumed redshift, z = 2. With composite modelling of polarization, spectrum of the prompt emission, and the afterglow, we infer that the first episode of emission originates from the photosphere with localized dissipation happening below it, and the second from the optically thin region above the photosphere. The photospheric emission is generated mainly by inverse Compton scattering, whereas the emission in the optically thin region is produced by the synchrotron process. The low radiation efficiency of the burst suggests that the outflow remains baryonic dominated throughout the burst duration with only a subdominant Poynting flux component, and the kinetic energy of the jet is likely dissipated via internal shocks which evolves from an optically thick to optically thin environment within the jet.