What you need to know about TDS Certificate as a deductor?
Everything you need to know about TDS certificate
What is a TDS Certificate?
The TDS certificate is issued by the deductor (the person who deducts the tax) to the deductee (the person from whose payment the tax is deducted).
There are two types of TDS certificates: Form 16 (for TDS on salary), and Form 16A (for TDS on non-salary payments).
According to Section 203 of the Income Tax Act, 1961, you are entitled to receive a certificate whenever you are subject to a tax deduction on your income.You must receive this certificate from the deductor, which must show the amount of TDS deducted.
- 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 which 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
If tax has been deducted at source from the salary paid to the employee, then the details of tax deducted at source (TDS) & deposited to the bank has to be provided in Form 16. Form 16 is the Salary TDS Certificate.
If the gross total income of the employee is Rs 2,50,000 or less, then the 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 as submitted through Form 24Q. Form 16 is issued annually to the employee i.e. after fourth-quarter TDS return filing.
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.
Eg:- Banks issue a Form 16A when TDS is deducted by them on interest earned by 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:
According to the Income Tax Act, employers must issue TDS certificates within 15 days after they file their quarterly TDS returns. As a result, Form 16 must be given within 15 days of the fourth quarter TDS reports being filed. The following are the deadlines for submitting Form 16A:
- For the first quarter, 1st April to 30th June – 15th August
- During the second quarter of 1st July – 30th September – 15th November
- According to the third quarter,1st October – 31st December – 15th February
- And for the fourth quarter , January 1st to March 31st – June 15th.
The penalty for non-issuance of TDS Certificates:
If a deductor fails to issue a TDS certificate by the deadline, he or she would be fined Rs 100 per day delay for each certificate. The penalty amount will not exceed the TDS amount for the quarter.
1, What is the full form of TDS?
Ans: The full form of TDS is – Tax Deducted at source.
2, On what kind of payments is TDS deducted?
Ans: Payments such as interest, salary, rent, commission, sale profits, etc. are subject to TDS.
3, How many types of TDS certificates are there?
Ans: Form 16 and Form 16[A].
And with that, we end our discussion on the TDS Certificate as a deductor. If you have any questions, drop them in the comment section below.