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    ISSUANCE OF TDS CERTIFICATE

    INTRODUCTION: 

    uChapterXVII of Income Tax Act,1961 (section190 to section 234F) deals with TDS provisions, i.e. applicability, compliance process, penalty clauses etc. Section 190 mandates deduction of Tax at source (TDS) in certain cases. 

    uSection203 of Income Tax Act mandates the Deductor of such tax to issue TDS Certificate to the Deductee as the proof of remittance to the Government, with in the certain time limit, which is explained in the later part of this article. 

    uThecertificate contains amount of Tax deducted, Remittance details, respective Assessment Year ,PAN and TAN details etc, which acts as proof for remittance of tax and helps in further verification process. 

    What is TDS Certificate? 

    vEeryperson responsible for Tax deduction at source is required to furnish a certificate to the payee to the effect that tax has been deducted along with certain other particulars. This certificate is usually called the TDS certificate.(Section 203). 

    Types of TDS certificates:

     There are 4 types of TDS Certificates: -

    vForm16- Annual TDS Certificate issued to employees (salary).

    vForm16A - Quarterly TDS Certificate issued to Deductee (i.e., other than salary, 194IA&IB cases) 

    vForm16B - TDS Certificate issued to the seller u/s 194IA vForm16C - TDS Certificate issued to the landlord u/s 194IB

    Let us now understand each Form in Detail 

    Form 16 

    uForm16isthe salary TDS certificate. It is an important document for Salaried Individuals. If the Net of Income from Salary and other income mentioned by employee to employer after deducting eligible deductions and allowances for the Financial Year, is more than the basic exemption limit (i.e. Rs 2,50,000 / Rs.3,00,000 / Rs.5,00,000 as the case may be), then employer is required to deduct and deposit tax with the Government.

    Furthermore, it is responsibility of the employer to furnish Form 16to the employee within the due date. 

    uForm16,thus is a certificate, where the employer certifies the details regarding the salary earned and Tax deducted etc.

    uIthastwoparts, Part A & Part B.

    uPartAhas Information of the Employer &Employee, like 

    o    Name &Address of the Employer & Employee 

    • PAN of the employer and employee and TAN of the employer o Details of Tax deducted & deposited with the government etc. 

    uPartBincludes details of Salary paid, Other Incomes declared by the employee to the employer, Deductions Allowed, Tax deducted etc. 

    uIfanemployee has worked with more than one employer during the Financial year, then he may have more than one Form 16 during the year.

    uTimeLimit for issuance of Form 16 – Form 16 is to be issued by 15th June of the financial year immediately following the financial year in which the income was paid and tax deducted.

    o     Example: For F.Y 2017-2018, Form 16 is to be issued by15th June 2018. 

    It is thus mandatory for the employer to issue Form 16 within the due date without any delays which helps employees in Further Process.

    Form 16A

    uForm16A is another type of TDS Certificate. While Form 16 is issued for the tax deducted in respect of Salary income, Form 16A is to be issued for Tax deducted on any income other than

    o     Salary income (U/s 192); 

    • Income from Sale of immovable property (U/s 194IA); and o Rental Income (for which TDS is to be deducted u/s 194IB) 

    i.e. Form 16A shall be issued by the Deductor when the TDS is deducted from Contract Income or Interest earned from Fixed Deposit or when TDS is deducted from Rent receipts, and on all other Income, other than those mentioned above.

    For Example: 

    • Banks shall deduct TDS on interest income u/s 194A. In this caseForm 16A shall be issued by Banker (the deductor) to the Customer (the deductee). 
    • A renders Professional Service to M/s.XYZ &Co for Rs.1,00,000 excluding tax. Here Ms.XYZ &Co deducts TDS of Rs.10,000 (Rs.1,00,000*10%=10,000). In this case M/s.XYZ &Co (the deductor) shall issue Form 16A to Mr.A. 

    uForm16A is a Quarterly TDS Certificate to be issued within 15 days from the due date of furnishing the statement of tax deducted at source, i.e.

    For Quarter Period

    Due Dates for furnishing the

    Due date for issuance of Form -

    statement of TDS

    16A

     

     

     

    1st April – 30thJune

    31st

    July

    15th

    August

    1st July – 30th September

    31st

    October

    15th

    November

    1stOctober – 31st December

    31st

    January

    15th

    February

    1st January – 31st March

    31st

    May

    15th

    June

     

    uForm16A shall contain details such as Name & Address of Deductor/Deductee, PAN&TAN of Deductor, PAN of the Deductee, Challan details, Details of Amount paid/credited,Tax deducted & deposited on such income etc.

     

    Form 16B (introduced w.e.f

    st

    y 2013):

     

     

    uApplicability – It is applicable for all the transactions for which Tax is deducted u/s 194IA (i.e. on Sale of Immovable Property). 

    uThisFormof TDS Certificate is to be issued by the Deductor (i.e. Buyer of the Property).

    deductTaxed shall be deposited electronically by a challan cum statement in Form 26QB within 30 days from the end of the month in which deduction is made

    uForForm26QB go to https://www.tin-nsdl.com/>>> pay taxes online >>> Form 26QB.

    uItismandatory for both buyer and seller to quote their PAN in the tax challan(26QB). However, exemption has been provided for both the buyer and seller to obtain the TAN for deducting tax on sale of the property. 

    uMoreover, it is the responsibility of Deductor (Buyer) to furnish the TDS Certificate in Form No.16B to the Payee(Seller) within 15 days from the due date for furnishing the challan-cum-statement in Form No. 26QB.

    Let us understand the sequence with the help of an example:

    Mr. A purchased a property worth Rs.75 lakhs from Mr. B on 15th April 2018. Mr. A, being the buyer of the property has the following responsibility:

    ?Mr.Aisresponsible for deduction of tax @1%. (In this case Tax deducted shallbe Rs.75,000).

    Let us assume Mr. A paid total amount of Rs.75,00,000/- net of tax to Mr. B on 15th April 2018 and tax is deducted on the same day i.e, on 15th April 2018, so Form 26QB is to be furnished within 30 days from the end of the month in which the deduction is made.

    ?Therefore Mr.A is obliged to furnish Form 26QB by30th May 2018. (i.e,30 days from the 30th April,2018) 

    Assuming Form 26QB is furnished on 30th May 2018,

    ?Heisobliged to Issue Form 16B by14th June 2018. (15days from furnishing of 26QB i.e, form 30th May 2018)

    How to deduct tax in case of more than one seller or buyer?

    ?Incasethere are more than one seller, the TDS will be deducted in a proportion in which the property is held, and consideration paid.

    ?ForExample: If the sale consideration is Rs. 75 lakhs and the payment is made to two sellers equally, the TDS needs to be deducted @1% that is Rs.75, 000/- equally from both sellers and two Form 16B need to be issued.

    ?Similarly,if there are more than one buyer, then each buyer needs to deduct TDS and pay the same using Form 26QB.

    Form 16C (notification 48/2017 dated 08th June 2017)

    uApplicability - Individuals and HUF who pay rent of Rs 50,000 or above per month or part there of will have to deduct TDS at the rate of 5% (u/s 194IB)

    The main objective of government in introducing this section primarily is to ensure both tenant and landlord file their Return of Income to reflect true disclosures. With the quoting of the PAN of both landlord and tenant, the Income Tax Department can easily track the disclosures of rent in Income Tax Returns. Also, such taxes are likely to get reflected in the form 26AS of the landlord for claiming credit of the TDS. 

    uTaxshallbe deducted at the time of credit of rent, for the last month of the previous year or the last month of tenancy (if the property is vacated during the year)ORat the time of payment thereof whichever is earlier. 

    uTimeLimit for Depositing of Tax: Tax should be deposited within 30 days from the end of the month in which the tax is deducted. It shall be accompanied by a challan cum statement in Form 26QC.1It is mandatory for both buyer and seller to quote their PAN in the tax challan(26QC). However, exemption has been provided for both the buyer and seller to obtain the TAN for deducting tax on sale of the property. 

    uTimeLimit for issuance of Form 16C:The person deducting the tax (i.e Tenant) is required to furnish Form 16C to the Landlord within 15 days from the due date of furnishing challan cum statement in Form 26QC.

    uForm16Cis thus a new TDS certificate introduced by the government of India. It reflects the amount of TDS deducted on rent @ 5 % by the individual/HUF (u/s 194IB). It is just like Form 16 or Form 16Aissued in the case of salary and other payments respectively.

    uOnlinechallan-cum-statement in Form 26QC is to be filed by each tenant for unique tenant-landlord combination for respective share. E.g. in case of one tenant and two landlords, two forms have to be filed in and for two tenants and two landlords, four forms have to be filed for respective rent shares.

    PROCEDURE FOR ISSUANCE OF TDS CERTIFICATES

    uHowtoDownload Form 16/Form 16A?

    Step 1: - For Form 16/ Form 16A login to TRACES (www.tdscpc.gov.in) using User id, password and PAN of the Deductor. In case of first time login, register in TRACES as a Deductor with the TAN Number and Challan number registered during the payment.

    Step 2: - Go to Downloads >> Form 16 or Form 16A

    Step 3: - Enter the details such as Financial Year, Quarter, Form Type etc and then click “Go”.

    For a single certificate fill the details in “Search PAN” column and in case of more than one certificate fill the details in “Bulk PAN Download”.

    Step 4: -Enter details like Provisional Receipt Number, Challan Details, PAN numbers of the deductee whose tax has been deposited with the above challan and Click on “Proceed”for Request for Downloading Form 16/Form 16-A. On submission, a Request Number is generated. Preserve the request number for further references.

    Step 5: - To view the status of downloaded request go to Downloads >> Requested Downloads >> View All. Alternatively, you can also view the status of the request by quoting the request number.

     

    Step 6: - On status being displayed as “Available”, the Forms get download in HTTP Form. User must convert this text file to PDF using ‘TRACES PDF Generation Utility’. This utility will convert the text file into individual PDFs for each PAN. Deductor can opt to digital signing of PDFs while converting them. 

    Step 7: - To convert text file to PDF, Download ‘TRACES PDF Generation Utility’

    1. Browse the Zip file (text file) downloaded from TRACES.
    2. Enter the password. The password for opening Form 16 / 16A will be TAN of the deductor in capital letters.
    3. Browse the location where the converted PDF file needs to be saved
    4. In case the user opts for Digital Signing of Certificate, browse the Digital Signature details.
    5. Then click on “Proceed” to get the files converted in PDF Format.

    (Refer the below screenshot)

    Issuance of TDS Certificate

    uItismandatory for all deductors to issue TDS certificate in Form No. 16A after generating and downloading the same from “TDS Reconciliation Analysis and Correction Enabling System” i.e. TRACES. 

    deductTheor shall, before issuance of certificate authenticate the correctness of contents mentioned therein and verify the same either by using manual signature or by using digital signature(circular 4/2013). 

    uWhereacertificate is to be furnished in Form No. 16, the deductor may, at his option, use digital signatures to authenticate such certificates. (Rule 31(6)(I)).

     

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