TDS
Tax Deduction at Source
AIM: Collect tax from the source of income.
Deductor deduct TDS from deductee and remit it in Government Account.
No TDS will be deducted if you are an individual or Hindu Undivided
Family (HUF), and your books are not required to be audited.
Types of TDS
Here are some of the income sources that qualify for TDS:
o Salary
o Amount under LIC
o Bank Interest
o Brokerage or Commission
o Commission payments
o Compensation on acquiring immovable property
o Contractor payments
o Deemed Dividend
o Insurance Commission
o Interest apart from interest on securities
o Interest on securities
o Payment of rent
o Remuneration paid to the director of a company, etc
o Transfer of immovable property.
o Winning from games like a crossword puzzle, card, lottery, etc.
Form 26AS is a statement that provides details of any amount deducted as
TDS or TCS from various sources of income of a taxpayer. It also reflects
details of advance tax/self-assessment tax paid, and high-value transactions
entered into by the taxpayer.
Form 24Q.
It is used for preparing eTDS returns for the TDS deducted on salary
under Section 192 of the Income Tax Act, 1961.
It has to be submitted on a quarterly basis by the deductor.
It contains details like salaries paid and the TDS deducted of the
employees by the employer.
What is a TDS Certificate?
TDS Certificates are of two types: Form 16 and Form 16A. Under Section
203 of the Income Tax Act, 1961, a certificate must be provided to the
deductee showing the amount that has been subtracted as tax. The
deductor is liable to provide this form to the deductee.
For salaried class: In case of salaried employees, employers are
required to provide them with Form 16 with a mention of the amount that
has been deducted as TDS. Form 16 contains a host of details such as the
computation of tax, the deduction of tax, and the payment of TDS.
Employers must issue this form to their employees before May 31 of the
following financial year.
For non-salaried class: The deductor provides the deductee with Form
16A, and it contains all the details regarding the computation of tax, the
deduction of TDS, and payments.
Due dates for payment of TDS
In case of deduction by an Office of Government:
Sl No. Description Time up to which the
tax deducted
is to be deposited
1 Tax deposited without Challan [Book same day
Entry]
2 Tax deposited with Challan 7th day of next month
3 Tax on perquisites opted to be 7th day of next month
deposited by the employer.
In case of deduction by deductor other than an Office of Government
Sl No. Description Time up to which to
be deposited.
1 Tax deducted in March 30th April next
financial year
2 Tax deducted in any other month 7th day of next month
3 Tax on perquisites opted to be 7th day of next month
deposited by the employer
Assessing officer with prior approval of the Joint Commissioner of
Income Tax may permit quarterly payments of TDS.
Sl. No. Quarter of the Date for quarterly
financial year ended payment
on
1 30th June 7th July
2 30th September 7th October
3 31st December 7th January
4 31st March 30th April of the next
Financial Year
Mode Of Payment Of TDS
1. When tax has been paid to the credit of the Central Government
without the production of a challan [Book Entry] a statement in
Form No. 24G before the 30th day of April where statement relates
to the month of March or in other case before 15 days from the end of
relevant month submit to the agency authorized by the Principal
Director General of Income‐tax (Systems).
2. If not submitted in time, then he/she will be liable to pay, by way of
penalty, a sum which shall be Rs.500/- for every day during which the
failure continues.
3. The ZAO / PAO of Central Government Ministries is responsible for
filing of Form No. 24G on monthly basis.
Book Identification Number or BIN
BIN consist of receipt number of Form 24G, DDO sequence number in Form
No. 24G and date on which tax is deposited
Payment by an Income Tax Challan
the amount of tax so deducted shall be deposited to the credit of the Central
Government by remitting it before the 7th day of the next month.
Interest, Penalty & Prosecution for Failure to Deposit Tax Deducted
If a person fails to deduct the whole or any part of the tax at source, fails to
pay the whole or any part of the tax to the credit of the Central Government
in prescribe time he/she shall be deemed to be an assessee-in-default in
respect of such tax & liable to penal action.
Shall be liable to pay simple interest at the rate of one per cent for
every month or part of the month on the amount of such tax from the date
on which such tax was deductible to the date on which such tax is deducted;
At the rate of one and one-half percent for every month or part of a
month on the amount of such tax from the date on which such tax was
deducted to the date on which such tax is actually paid.
In case any person, including the principal officer of a company fails to
deduct the whole or any part of the tax on the sum paid to a payee or
on the sum credited to the account of a payee but is not deemed to be
an assessee in default the interest shall be payable from the date on
which such tax was deductible to the date of furnishing of return of
income by such payee.
Further, section 276B lays down that if a person fails to pay to the credit of
the Central Government within the prescribed time, as above, the tax
deducted at source by him or tax payable by him under the proviso to
Section 194B, he/she shall be punishable with rigorous imprisonment for a
term which shall not be less than three months but which may extend to
seven years and with fine.
Furnishing of Certificate for Tax Deducted (Section 203)
Form 16
Have details of the amount of TDS.
Should be furnished to the employee by 15th June after the end of the
financial year
Even the banks deducting tax at the time of payment of pension are
required to issue such certificates.
The certificate in Form 16 shall specify the following:
Valid permanent account number (PAN) or Aadhaar number, as the
case may be, of the deductee;
Valid tax deduction and collection account number (TAN) of the
deductor;
Book identification number or numbers (BIN) where deposit of tax
deducted is without production of challan in case of an office of the
Government;
Challan identification number or numbers (CIN*) in case of payment
through bank.
Receipt numbers of all the relevant quarterly statements of TDS
(24Q). The receipt number of the quarterly statement is of 8 digit.
All deductors (including Government deductors who deposit TDS in
the Central Government Account through book entry) shall issue the
Part A of Form No. 16, by generating and subsequently downloading
it through TRACES Portal and after duly authenticating and verifying
it, in respect of all sums deducted on or after the 1st day of April,
2012
Part A of Form No 16 shall have a unique TDS certificate number.
The deductor shall generate 'Part B (Annexure)' of Form No. 16 from
the Traces website and issue to the deductee after due authentication
and verification along with the Part A of the Form No. 16.
It may be noted that under the new TDS procedure, TAN of deductor/
PAN or Aadhaar number of the deductee and receipt number of TDS
statement filed by the deductor act as unique identifier for granting
online credit of TDS to the deductee. Hence due care should be taken
in filling these particulars. Due care should also be taken in indicating
correct CIN/ BIN in TDS statement.
If the DDO fails to issue these certificates to the person concerned,
he/she will be liable to pay, by way of penalty, a sum which shall be
Rs.500/- for every day during which the failure continues. However,
the amount of such penalty shall not exceed the amount of tax
which is deductible at source
Following points are to be kept in mind while filling amended Form
16:
1. Government deductors are required to fill information in item I of Part A
if tax is paid without production of an income-tax challan and in item II of
Part A if tax is paid accompanied by an income-tax challan.
2. Non-Government deductors are to fill information in item II of Part A.
3. The deductor shall furnish the address of the Commissioner of Income-
tax (TDS) having jurisdiction as regards TDS statements of the assessee.
4. If an assessee is employed under one employer only during the year,
certificate in Form No. 16 issued f or the quarter ending on 31st March of
the financial year shall contain the details of tax deducted and deposited for
all the quarters of the financial year.
5. (i) If an assessee is employed under more than one employer during the
year, each of the employers shall issue Part A of the certificate in Form No.
16 pertaining to the period for which such assessee was employed with
each of the employers.
(ii) Part B (Annexure-I) of the certificate in Form No.16 may be issued by
each of the employers or the last employer at the option of the assessee.
(iii) Part B (Annexure-II) of the certificate in Form 16 may be issued by the
specified bank to a specified senior citizen (refer section 194P of the Act).
6. In Part A, in items I and II, in the column for tax deposited in respect of
deductee, furnish total amount of tax, surcharge and health and education
cess.
7. Deductor shall duly fill details, where available, in item numbers 2(f) and
10(k) before
furnishing of Part B (Annexure) to the employee.
8. If an assessee is employed by more than one employer during the year,
each of the
employers shall issue Part A of the certificate in Form No. 16 pertaining to
the period for which such assessee was employed with each of the
employers and Part B may be issued by each of the employers or the last
employer at the option of the assessee.
9. TDS certificate (Form16) would be generated for the deductee only if
Valid PAN or Aadhaar number as the case may be, is correctly mentioned in
the Annexure II of Form 24Q in Quarter 4 filed by the deductor. Moreover,
employers are advised to ensure in Form 16 that the status of “matching”
with respect to “Form 24G/OLTAS” is ‘F’. If the status of matching is other
than ‘F’, kindly take necessary action promptly to rectify the same. It is
pertinent to22 mention here that certain facilities have been provided to
the deductors at website
[Link]/including online correction of statements (Form 24Q).
[Note: TRACES is a web-based application of the Income-tax Department
that provides an interface to all stakeholders associated with TDS
administration. It enables viewing of challan status, downloading of NSDL
Conso File, Justification Report and Form 16 / 16A as well as viewing of
annual tax credit statements (Form 26AS). Each deductor is required to
Register in the Traces portal.
Form 16/16A issued to deductees should mandatorily be generated and
downloaded from the TRACES portal].
