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TDS CERTIFICATE | Company Vakil

“TDS” is short for Tax Deduction at Source. If you are a salaried employee then you must have heard of this term. A salaried employee doesn’t pay his taxes directly to the government. His taxes are paid by the company or organisation he is employed in and the amount is deducted from his income. That is why it is called Tax Deduction at Source.
Under section 203 of the Income Tax Act, 1961, it is must for the employer to deduct tax of their salaried employees and issue a certificate for the same. That certificate is discussed below.

What is TDS certificate?

• When the tax is deducted by the employer of an employee, a certificate is issued to the employee regarding the same.
• It contains all the details such as the name of the employee and the amount of taxes deducted etc.
• It is very much necessary document for availing any credit or returns, in case eligible, by any salaried employees.

Types of Certificate

• There are mainly two types of certificate. They are –
o Annual Certificate – This is issued to the employee when tax deduction is done on salary. It is also known as Form 16.
o Quarterly Certificate – This one is issued to the employee for other earnings such as bonuses etc. Even when a taxpayer earns interest on any deposit such as fixed deposit then also this certificate is issued by the bank quarterly as banks deduct taxable amount from it. This is also known as Form 16A.

Note : – This TDS certificate is issued to only those employees by the employer whose annual income exceeds Rs 2,50,000. As these employees are exempted from the government to pay any taxes.

TDS Due date

The due date for issuing Tax Deduction Certificate is different for each type. For –
1. Annual Certificate – This certificate or Form 16 should be issued by the employer within 15 days of filing their fourth quarterly TDS returns. Failing of which may incur a penalty.
2. Quarterly Certificate – The date of issuance of this certificate or Form 16A is below –
a. First quarter (1st April to 30th June) – 15th August
b. Second quarter (1st July to 30th September) – 15th November
c. Third quarter (1st October to 31st December) – 15th February
d. Fourth quarter ( 1st January to 31st March) – 15th June

Penalty

There’s a penalty for not issuing concerned certificate on time. An amount of Rs 100 per day will be charged as a penalty which should not exceed the TDS amount for the quarter.

Other points to take note of : –

• There is a need of cross verification of the TDS certificate with the Form 26AS.
• Form 26AS contains all details of deduction, it’s a kind of annual statement of the same.
• The taxpayer must cross verify between two documents.
• In case of any discrepancy, a rectification of the same must be sought at the earliest by the taxpayer in consultation with the employer or deductor.
• In case the employee is a non-resident Indian, then apart from tax deduction on salary, the employer or deductor should also deduct withholding tax rates specified under the Double Taxation Avoidance Agreements. The withholding rates can be checked on Income Tax India websites.
• The certificate should be digitally signed by the employer and the same can be authenticated by checking the tick mark. In case, the digital signature is absent or fake, there exists a question mark in place of tick mark.
• TRACES is used to generate TDS certificate. TRACES stands for TDS Reconciliation Analysis and Correction Enabling System. It is a system developed by Income Tax Department for the same purpose.

For more detail visit Company Vakil

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