TDS certificate

What is TDS Certificate?

Under Section 203 of the Income Tax Act, 1961 it is mandatory for all Deductors to deduct TDS. After deducting the TDS, the Deductor has to issue relevant certificates. This certificate is called as TDS Certificate.

However, there is no obligation to issue TDS certificate in certain cases. This will not be applicable in case of tax at source is not deducted /deductible by claims of exemptions/ deductions.

Important points

  • On the basis of these certificates, the taxpayer can claim the credit and the refund (if any).
  • TDS certificate should be generated only from TRACES stands for TDS Reconciliation Analysis and Correction Enabling System by the Income Tax department.
  • The Deductor can digitally sign the TDS certificate using the digital signature.

Types of TDS certificates:

There are two types of TDS Certificates;

  • Annual TDS Certificate – Form 16, issued to employees
  • Quarter TDS Certificate – Form 16A issued to Deductee’s

Form 16:

If tax has been deducted at source from the salary paid to employee, then the details of tax deducted at source (TDS) & deposited to bank has to be provided in Form 16. Form 16 is the Salary TDS Certificate.

If the total income of the employee is Rs 2,50,000 or less, then Deductor need not have to deduct TDS and therefore, a Form 16 may not be issued to the employee.

The details available in Form 16 are submitted through Form 24Q. Form 16 is issued annually to the employee i.e. after fourth-quarter TDS return filing.

Form 16A:

Like Form 16, Form 16A is also a TDS Certificate. Form 16 is for salary income, whereas Form 16A is applicable for TDS on Income Other than Salary.

Banks issue a Form 16A when TDS is deducted by them on interest earned the depositor on the fixed deposits. Deductor will issue a Form 16A if they have made TDS deductions from payments made.

Form 16A is also issued for TDS deductions on insurance commission paid.

The details available in Form 16A are submitted through Form 26Q and 27Q. Form 16 is issued quarterly to the Deductee i.e. after each quarter TDS return filing.

Due Dates to issue TDS Certificates:

Employers have to issue Form 16 within 15 days of filing their fourth quarter TDS returns.

For example, for FY 2017-18 fourth quarter TDS filing due date is 31st May 2018. Hence, the maximum due-date for issuing Form 16 is 15th June 2018.

Deductors have to issue Form 16A within 15 days of filing their quarterly TDS returns. The due dates for issuing Form 16A is as below;

1st Quarter 1st April – 30th June 15th August
2nd Quarter 1st July – 30th September 15th November
3rd Quarter 1st October – 31st December 15th February
4th Quarter 1st January – 31st March 15th June

The penalty for non-issuance of TDS Certificates:

If the Employer/Deductor is not able to provide the certificate within due date, then a penalty of Rs. 100 per day of delay per certificate has to be paid. Remember that penalty cannot exceed the TDS amount deducted for the quarter.