As the Income Tax Department requires, any person (assessee) making the payment for specified professional services needs to deduct TDS before making the payment. TDS certificate is the proof of the amount of tax the payer has paid and income the assessee has earned. If you’re an assessee, you’re required to issue the TDS certificate for the deduction.
In case you’re the payer, the TDS certificate shows how much income you have earned from particular employer/ deductor. It also makes easy for you see online whether the TDS has been deposited. Based on this, you can claim income tax refund if your annual salary is below the threshold of taxable income.
There are two types of TDS certificates –
- Form 16, for salaried professionals.
- Form 16A, for non-salaried people
Although section 203 mandates all deductors to deduct TDS and issue a TDS certificate, it’s not an obligation for them if TDS is not deducted due to certain exemptions.
Importance of TDS certificate
TDs certificate is an important document for the payer or employee, in particular. Here are the reasons why.
- TDS certificate tells the government and the Income Tax Department how much you have earned from the employer or payer and how much tax deduction was there.
- Form 26AS doesn’t include the break-up of your income, nor does it show the details of deductions you’re eligible for under section 80C-U. Since TDS certificate issued by the employer has these pieces of information, it’s an essential document for you if you’re a salaried professional.
- Another importance of TDS certificate is that you can compare it with the Form 26AS to spot any discrepancy in details and get them corrected. This wouldn’t be possible if you don’t have one.
- If the Form 26AS doesn’t reflect the TDS amount for some reason, you can quickly refer to the TDS certificate to prove there was a deduction.
- Additionally, if your Form 26AS reflects somebody else’s income and TDS, you can refer to the TDS certificate to report the issue and get it fixed.
- You can also compare these two documents to confirm whether the deducted tax has been deposited with the government.
- If under a certain possibility, the Income Tax Department decides to scrutinize your income tax returns, you’ll have to present your TDS certificate. This will be helpful in case the Form 26AS doesn’t have the details of TDS deduction.
Therefore, always remember to collect your TDS certificate from the deductor.
- Ensure that TDS certificate is downloaded only from TRACES website.
- The certificate should be signed, either manually or digitally, by the person issuing it.
- Review and verify that your name, your PAN, and deductor’s TAN are correct.
- Check that the amount paid to you matches the one reflecting in your bank statement.
- Compare TDS certificate and Form 26AS to check if the TDS deduction matches.
Timeline for TDS certificate
The I-T department has clearly kept and communicated a deadline for the TDS certificate to be issued. The deductor is required to issue Form 16A within 15 days from TDS return filing. TDS certificate for salaried people, Form 16, should be issued by 31 May. Beyond the given dates, the deductor will have to incur a penalty of Rs. 100 per day. The penalty, however, cannot exceed the TDS amount.
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