The situation arises:-
If any person deducts TDS under the provisions of the Income Tax Act, 1961, then such person shall be required to issue a TDS certificate to the deductee. Deductor means the person who has deducted the TDS. Deductee means the person who’s TDS has been deducted.
In this article, we will try to cover up the provisions relating to the TDS certificate but before understanding the TDS certificate in detail, we have to first understand the whole process of TDS.
Let’s take an example:
Mr. A has received professional services from Mr. B for the consideration of Rs. 3 lakhs.
Mr. A shall deduct the TDS @ 10% under section 194J of Rs. 30,000 and paid the net amount to Mr. B.
Mr. A Shall deposit TDS amount to the government within 7 days from the end of the month in which TDS has been deducted.
Mr. A shall also be required to file the return within 30 from the end of the quarter in which TDS has been deducted.
Now, Mr. A shall issue a TDS Certificate in form 16 to Mr. B which is proof to Mr. B that Mr. A has deposited the TDS amount to the government and on the basis of this certificate, Mr. B shall claim the TDS receivable in his books and income tax return.
A TDS certificate is required to be issued in accordance with the provision of section 203 of the income tax act, 1961. There are different forms 16 has been defined on different payment which are as follows:
- Form 16: TDS certificate to be issued in case of TDS deducted against the salary.
- Form 16A: TDS certificate to be issued in case of TDS deducted against the payment other than salary like TDS on interest or TDS on commission etc.
- Form 16B: TDS certificate to be issued in case of TDS deducted against the sale of the property.
- Form 16C: TDS certificate to be issued in case of TDS deducted against Rent.
Although, there are different forms that have been specified for different payments but the process and objective of all forms are the same.
Type of TDS certificate
There are 2 types of TDS certificates that can be issued by the deductor and these are Annual Certificate and Quarterly Certificate.
The time limit for issuing TDS Certificate- Form 16
If the employer is deducting TDS against the salary of the employee then the employer shall issue an annual certificate in form 16 within 15 days from the end of the month of the due date of filing fourth-quarter return.
Although for the financial year 2018-19, CBDT has extended the due date for issuing the form 16 to 10th July 2019.
Note:- For the salaried employees, TDS u/s 192 (exception)
If the total income of the employee falls below Rs. 2,50,000/- then there is no need to deduct TDS because up to Rs. 2,50,000, the assessee is eligible for the basic exemption limit and hence no TDS certificate shall be issued to him.
TDS Certificate at a lower Rate
In case, where the total tax liability of the assessee is lower than the number of TDS which has been deducted on certain services provided by him than such assessee shall have to file the return of income to claim the refund and it blocks his capital also.
For this, the government has introduced section 197 in which such assessee can file an application to his assessing officer for issuing a certificate under section 197 in which it is stated that the TDS shall be deducted at such a lower rate or Nil rate as authorized by the assessing officer. The assessee shall give a copy of such certificate to the payee who shall then deduct the TDS according to the certificate. If you want to read about this certificate in detail then you can refer to our previous article.
The time limit for issuing TDS Certificate- Form 16A/16B/16C
If the deductor has deducted the TDS against any payment other than salary then he shall be required to issue a quarterly TDS certificate in form 16A within 15 days from the end of the month of the due date for furnishing the quarterly returns. The details are as follows:
|1st Qtr||01.04.2018 TO 30.06.2018||15-Aug-18|
|2nd Qtr||01.07.2018 TO 30.09.2018||15-Nov-18|
|3rd Qtr||01.10.2018 TO 31.12.2018||15-Feb-19|
|4th Qtr||01.01.2019 TO 31.03.2019||15-Jun-19|
The due dates for issuing form 16B and 16C are the same as specified for 16A.
Note: While deducting TDS, there is no need to add cess @ 4% on the TDS amount EXCEPT on TDS in salary. In Simple words, we have to add cess amount in the TDS against the salary payment.
The other exception of the above note is defined under section 195. That means, if the assessee is deducting the TDS on the payment made to NRI, then also he shall have to add cess amount on the TDS amount and then he should deduct the TDS.
Details Contain in form 16(TDS Certificate)
At the time of filing of TDS Certificate, the deductor have to ensure the following contents in TDS certificate:
- Name and address of the deductor and deductee
- Permanent Account Number of deductor and deductee (PAN)
- Tax identification number of deductor (TAN)
- Define the nature of the payment
- The period for which the TDS has been deducted during the financial year
- The amount on which TDS has been deducted and the amount of TDS.
- Challan number, BSR Code of the Bank branch, cheque number and the date on which the tax has been deposited.
- Digital Signature of the deductor
Note: if the deductor has deducted TDS u/s 194IA, then he is not required to obtain the TAN number and in this case, the deductor is required to issue form 16B.
Comparison Between Form 26AS and TDS Certificate:
The TDS deducted by the deductor would be shown in form 26AS of the deductee. Hence, the deductee can reconcile the TDS amount with 26AS. If there is a mismatch in your Form 26AS with the TDS certificate then the deductee has to inform the deductor about such mismatch because the deduction of TDS shall be available by the department on the basis of 26AS.
In most of the cases, it has been noted that the main reason for the mismatch in form 26AS and TDS certificate is the quotation of the wrong PAN number in the TDS return by the deductor.
Procedure for obtaining form 16 is as follows:
The TDS certificate can be obtained by the deductor, for the purpose of issuing it to the deductee, from traces site by login into his account. For this, the deductor first has to enter his user name, Password and TAN Number.
Once the deductor has logged in to his account, there is certain information that needs to be filled after which the deductor shall be able to download the TDS certificate.
Once the deductor has matched the information mentioned in the TDS certificate with the information available to him, he shall take the print out of the copy of the form and then issued it to the deductee.