Start collecting your TDS certificates now, deductors can't delay anymore

Tax payers can start collecting their TDS certificates now as the last date for all deductors to finalise and issue these was over yesterday - May 31. This means that today - June 1, 2016, onwards all deductors of tax at source (e.g employers, banks etc) have to compulsorily provide you the TDS certificate when you ask them for the same else face a penalty.

Time limit for issue of TDS certificates:
The income tax department has set time limits for issuing of TDS certificates (Form 16 and 16A) by the deductors. Failure to issue TDS certificates by due date can result in penalty of Rs 100 per day of delay per certificate, says Sonu Iyer, partner & national leader - People Advisory Services, EY. However, the penalty cannot exceed the amount of tax deducted, she adds.

Employers deducting tax at source are duty-bound to issue TDS certificates in Form 16 to their employees on an annual basis latest by 31st May of the relevant assessment year. The relevant assessment year is the year immediately following the financial year for which the tax has been deducted at source.

Other deductors (such as banks which deduct TDS on interest paid on deposits) have to issue the TDS certificates in Form 16A to the deductee on a quarterly basis. The dates by which form 16A must be issued to the deductee are: For quarter 1 - 30th July For quarter 2 - 30th October For quarter 3 - 30th January For quarter 4 - 30th May

This implies that by now you should have received Form 16A for the first 3 quarters of financial year 2015-16. Some deductors may have already issued Form 16A for the 4th quarter by now but most tend to start distributing them after May 30 - the last date by which they have to issue them.

While May 31 is the last date for employers to issue TDS certificates (for TDS on salary), in practice companies often finalise and date the certificates before or on May 31 in order to adhere to the deadline but the actual physical dispatch or distribution of these may only start the next day i.e. June 1 onwards. This is why the first week of June is really when most people can get their TDS certificates.

Why TDS?
As per the provisions of income tax laws of India, each employer is bound to deduct the tax on behalf of his employee on a monthly basis. On the other hand it is the duty of the employee to report the details of tax deductible investments made by him and also details of any other income to the employer.

Entities other than employer, such as Banks, Cooperative Societies, Companies , Business vendors etc, have to deduct tax at source from commercial payments to you as per the provisions of Indian income tax laws.

Each deductor has the duty of issuing TDS certificates to the deductee.

Why you must provide PAN to the deductor
It is the duty of the assessee / deductee to provide his PAN to the deductor or else the deductor will deduct his tax at a higher rate (generally 20%). Also, if PAN is not provided the TDS will not reflect in your Form 26AS which is linked to your PAN. This is because the deductor will not know which PAN to assign the TDS to while uploading data in the income tax site.