Background: In a series of amendments Central Board of Direct Taxes (CBDT) has amended the provisions relating to Tax Deduction at Source (TDS) vide Finance Bill 2010 and vide Notification No. 41/2010 Dated 31/05/2010. The new provisions shall apply in respect of TDS from 1st April 2010.
Deposits of TDS:- In case of salaries and other payments, the tax deducted by the employer/deductor is required to be deposited with the tax authorities on or before seven days from the end of the month in which the tax has been deducted. A relaxation has been provided for the tax deducted at the end of the financial year i.e., in the month of March wherein tax could be deposited on or before 30th April.
Therefore as per the new provisions- Time limit for deposit of TDS for the entire month of March will be 30th April instead of two separate time limits viz. 7th April for TDS up to 30th March and 31st May for TDS as of 31st March.
Examples:
1. If TDS Is Deducted For the Month of January’ 2011 then it has to be deposited on or before 7th February 2011
2. If TDS Is Deducted For the Month of March’ 2011 (including TDS on 31st March’2011) then it has to be deposited on or before 30th April 2011.
Periodicity & Date by which TDS certificate needs to be issued
A) Form 16 (Salary Certificate) :- In case of salary payments, an annual TDS certificate in Form 16 is to be issued by the employer to the employee by May 31 following the end of relevant financial year.
Example:
The TDS Certificate (Form 16) for F.Y. 2010-11 must be issued on or before 31st May’2011.
Further, the Form 16 should contain particulars as to the PAN of the employee, the TAN of the employer, Challan identification numbers and receipt numbers of all the quarterly statements (Form 24Q) filed by the employer. The employer, as an option, may use digital signatures to authenticate the Form 16 subject to specified conditions.
B) Form 16 (For TDS on Income Other then Salary):- In case of payments other than salary, the deductor is required to issue to the deductee, Form 16A on a quarterly basis within 15 days from the due date of furnishing the quarterly TDS statement (Form 26Q/27Q).
It is important to note that earlier, an option was available to the deductor to issue monthly or annual certificates subject to the prescribed conditions. However, now quarterly TDS certificates would have to be issued as per the new rules.
New Due Dates for Filing Quarterly TDS statements
Quarterly statements are to be filed for TDS on salary by employer in Form 24Q and on other payments by the deductor in Form 26Q/27Q as prescribed. These quarterly statements are to be filed within 15 days of the end of the each quarter. Due date for furnishing TDS return for the last quarter of the financial year has been modified to 15th May w.e.f 01.04.2010 (from earlier 15th June). The revised due dates for furnishing TDS return are:-
| Sl. No. | Date of ending of the quarter of the financial year | Due date |
| 1. | 30th June | 15th July of the financial year |
| 2. | 30th September | 15th October of the financial year |
| 3. | 31st December | 15th January of the financial year |
| 4. | 31st March | 15th May of the financial year immediately following the financial year in which deduction is made |
Example:
For the TDS on payments other than salary with respect to Quarter I i.e. 1.04.2010 to 30.06.2010:-
The Quarterly Statement (Form 26Q/27Q) should be filed on or before 15th July’2010 and the TDS Certificate (Form 16A) should be issued on or before 30th July’2010.
Employed with more than one employer during the year
A new Form 16 has been prescribed which contains two sections, Part ‘A’ and Part ‘B’. If an employee is employed by more than one employer during the financial year, each of the employer is required to issue Part ‘A’ of the certificate in Form 16 pertaining to the respective period for which such employee was employed with the respective employer. Further, Part ‘B’ of Form 16 may be issued by each of the employer or by the last employer only as per the option of the employee.
The new rules have amended the due date for issuing the TDS certificate to the employees in Form No. 16 from April 30 to May 31 following the end of the financial year.
In case of payments other than salary, Form 16A would now have to be issued on quarterly basis vis-à-vis the earlier option of issuing it on a monthly / annual basis.
Even though the Form 16/16 A is not required to be filed with the tax return, still the employee/deductee should ensure that all the necessary particulars in respect of the TDS on salary/other payments are correctly recorded in these forms, to ensure that there are no issues at a later date while claiming credit for the TDS in personal/other tax return.
Mode of Payment of TDS: Following persons shall be liable to pay TDS electronically i.e. internet banking or debit/credit cards:
i) A company
ii) A person (other than a company). To whom provisions of section 44AB are applicable
Rate of Interest for Late payment of TDS: (w.e.f. 1st July 2010).
i) For late deduction of TDS : 1% for every month or part of the month
ii) For late deposit of TDS after deduction: 1.50% for every month or part of the month
Increase in thresholds limit of deduction of tax from various payments :-Finance Bill 2010 increases various thresholds limit for deduction of tax from various payments like Winning from Lottery or Crossword Puzzle, Winning from Horse Race, Payment to Contractors, Insurance Commission, Commission or brokerage, Rent, Fees for Professional and Technical Services. The proposed amendments w.e.f 1st July, 2010 made under the new provisions are summarized as under:
(Amounts in Rs.)
| Section | Nature of Payment | Existing | Proposed |
| 194B | Winning from Lottery or Cross word puzzle | 5,000 | 10,000 |
| 194BB | Winning from Horse Race | 2,500 | 5,000 |
| 194C | Payment to Contractors [per Transaction] | 20,000 | 30,000 |
| 194C | Payment to Contractors [Annual Limit] | 50,000 | 75,000 |
| 194D | Insurance Commission | 5,000 | 20,000 |
| 194H | Commission or Brokerage | 2,500 | 5,000 |
| 194I | Rent | 1,20,000 | 1,80,000 |
| 194J | Fees for Professional and Technical Services | 20,000 | 30,000 |
Conclusion: – Amendments made by the Government has increased the trouble of Businessmen as now he has lesser time to File his TDS returns and have to pay interest for late payment of TDS at increased rate of interest. Government has further increased the trouble for small businessmen by mandating the payment of TDS online for those covered under tax audit provisions.
Dear Sir
I just want to ask one small query regarding late of payment t.d.s. Then please clarify after understanding below mention example
Name of Vender :- XYZ CO LTD
Invoice No :- XXX Dated 15/12/2010
Invoice Amount :- 10000.00
T.D.S. Deduction Date :- 15/01/2011
Interest on Late of T.D.S. :- 1.00 %
Deposit Date of Late payment of T.D.S. on 07/03/2011
Should we deopsit t.d.s. with Interest @ 2.5 % (1 % Late deduction + 1.5 % deposit) on 07/03/2011
Please confirm should we depsit t.d.s. with Interest 1 % / 1.5 % / 2.5 % on t.d.s. default amount.
Awaiting your reply.
Best regards
Tanmay Paranajape
Telephone No :- 9158412000