The certification from the deductor, for the deduction and payment of the respective TDS amount to the bank, issued to the deductee is a TDS certificate.
How it will be useful:
The deductee should produce the details of this certificate, during the regular assessment of income tax, to adjust the amount of TDS against the Tax payable by the Deductee [assessee].
- It is mandatory for all the deductors to issue the “Certificate of tax Deducted” to the respective deductee. [Refer Section 203(1) and 203(2)].
- However, there will be no requirement to furnish a certificate for the deductions made on or after 01st April 2010 [Refer Section 203(3)]
- This has been amended four times on 01/04/2005, 01/04/2006, 01/04/2007 and 01/04/2008 by respective finance acts.
Types of TDS certificates:
In case of Salaries, the certificate should be issued in FORM 16 containing the Tax computation details and the Tax deducted & Paid details. This refers to the details submitted over Form 24Q.
In case of Non-Salaries, the certificate should be issued in FORM 16A containing the Tax deducted & Paid details. Separate certificates should be prepared for each Section [nature of payment]. This refers to the details submitted over Form 26Q and 27Q.
In case of Tax Collected at Source, the certificate should be issued in FORM 27D containing the Tax Collected & Paid details. Separate certificates should be prepared for each Section [nature of collection]. This refers to the details submitted over Form 27EQ.
Issuing the certificate:
- Form 16 should be issued to each employee “within one month from the close of the financial year in which such deduction was made” [refer Rule 31(3)].
- If the certificate is lost, deductor may issue a duplicate Certificate on a plain paper giving necessary details as contained in Form No. 16 [or Form 16Aa as applicable]. [Refer Rule 31(4)].
- Deductor can issue the certificate to the employee, within one-month from the end of the month during which salary is paid, anytime during the financial year. This will be applicable mainly where employee changes the job during the financial year.
- Form 16A should be issued to the deductee “within one month from the end of the month during which the credit has been given or the sums have been paid” [refer Rule 31(3)].
- Where more than one Form 16A is required to be furnished to deductee for TDS made during a financial year, deductor may on request from deductee, issue within one month from the close of such financial year a consolidated certificate in Form No. 16A for TDS made during whole of such financial year. [Refer Rule 31(3)].
- If the certificate is lost, deductor may issue a duplicate Certificate on a plain paper giving necessary details as contained in Form No. 16A. [Refer Rule 31(4)].
Generating Numbers for certificate:
The deductor has provision to generate Form 16A for any duration from the software. This can be achieved in manually giving the numbers to the certificates or making the numbers automatically!!
Below are the main points for generation of numbers.
- Every certificate number will be contain following in the same order, separated by forward-slash.
- Deductee ID
- Certificate Number
- Deductor can generate the numbers automatically, per deduction/Month/Quarterly/or for whole Year, as per his convenience.
- The certificate will be generated referring these numbers and one certificate will be generated for unique number.
- If there are no certificate numbers assigned to deductions, software will not generate Form 16A for that/those deduction
It is a normal practice to issue Form 16A along with a covering letter. This practice ensures proper dispatch of the certificate. Using Saral TDS, you can generate covering letters for TDS certificates.