The time for filing Q4 TDS returns with employee details and issuance of Form 16 is upcoming. In case you have paid salaries last financial year, it’s important to comply with TDS regulations and issue Form 16 to employees. At IndiaFilings, we can help you do the same easily. For more information refer to the guide below or feel free to contact me for assistance.
Also, the Government has announced various penalty waiver for MSMEs for lapses in GST Return Filing. NIL penalty is now applicable for various GST returns if there were no transactions and the maximum penalty has also been capped. So, in case you require assistance with GST Compliance or Accounting, please let me know.
TDS on Salary
TDS is calculated at the income tax rates prescribed for the financial year in which the payment to the employee is made. The person responsible for paying can increase or decrease the amount to be deducted based on any adjustments in previous deficiency or excess deduction. The total amount of TDS each month will be determined by the following elements:
House rent allowance
Donation by employees u/s 80G
Bonus or Incentives
If a person is employed by more than one employer during a financial year, the tax will be deducted on the aggregate salary by one of the employers – as chosen by the employee by submitting information in Form 12B. Thus in an employee has more than one employer in a financial year, he/she is required to furnish information in Form 12B to one of the employers. After submission of Form 12B to an employer, it becomes the obligation of the employer to deduct TDS.
Deposit of Tax to Government by Employers
The tax deducted from the employee’s salary must be deposited by the employer along with an income tax challan and ITNS 281 on or before the 7th of every month – for the previous month. From 2008, all corporations that are subject to tax audits are required to make the TDS payment online through an internet banking facility. An assessee can also make payment of taxes from the account of any other person. However, the challan for making payment should indicate the PAN of the assessee whose behalf the payment is made.
Filing of TDS Return by Employers
Employers are required to file quarterly TDS returns with the Government providing details of tax deducted from salary. Information about tax deduction from salary under Section 192 is filed in Form 24Q. The employer at the time of filing the TDS return would file the following information to the Government.
- TAN of the employer
- PAN of the employer
- PAN of the employee
- Details of tax deposited with Government with the challan identification number
- Amount if any paid to employees without TDS
Due Date for Filing TDS Returns by Employers
TDS return must be filed with the Government every quarter as follows:
Due Date for Filing TDS Return
April – May – June
July – August – September
October – November – December
January – February – March
Annexure-II of TDS Return in May 31st
In the TDS return filed by employers on May 31st, various details about the employee must be furnished by the employer along with details of TDS deducted and deposited. Annexure-II of the TDS return has various data-points and must be prepared carefully by the HR and Accountant of the business.
Issuance of Form 16 to Employees
Once the employer files the necessary TDS returns, the Government would issue TDS certificates to the employer – which in turn is provided to the employees. Form 16 provides details about TDS from salary. Form 16B provides details of TDS under Section 194-IA, Form 16C for TDS under Section 194-IB, Form 16A for TDS from other than salary, and Form 27D for TCS.
The due date for issuance of Form 16 is on or before June 15th of the financial year immediately following the financial year in which the tax is deducted. In the case of Form 16A, the same should be issued every quarter.
Salary TDS Certificate in Form 16
The new salary TDS certificate in Form 16 contains two parts namely Part A and Part B.
Part A contains information of the employer like name, address, PAN/TAN of the employer. Employer information like PAN, assessment year, the period of employment, address of communication, a summary of TDS return filed, salary paid, amount of TDS, and details of TDS deposit.
Part B includes details of salary paid, other incomes, amount deductible under Chapter VI-A, taxa payable, and relief under section 89. Part B also includes a separate verification. In verification, the deductor will certify that salary/tax details are complete and correct based on account books and other available records.
If a person is employed by more than one employer, then each of the following will issue Part A of Form 16. Part B can be issued by both or the last employer.
Form 16 with Digital Signature
Part A of Form 16 can be issued only by downloading it from the TRACES Portal. Part B of Form 16 can be manually prepared by the employer. Before issuing Part A and Part B of Form 16 to employees, the employer is required to authenticate the correctness of contents.
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