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TDS Certificate


TDS Certificate

TDS or Tax Deduction at Source refers to a tax collection methodology under income tax law. Any person who is required to deduct tax at source and has deducted TDS must issue a TDS certificate. TDS certificate helps the assessee to claim the applicable tax credit, along with the applicable refunds. This article mentions the different types of TDS certificates.

TDS Deductor

Any person who is engaged in the deduction of TDS is required to issue a TDS certificate. To deduct TDS, a deductor must first obtain TAN registration. Presently, TAN registration is provided along with company registration automatically.

Types of TDS Certificate

TDS certificates are of two types namely, Annual TDS Certificate and Quarterly TDS Certificate.

Annual TDS Certificate

Annual TDS certificate is issued to employees for TDS on Salary. The TDS certificate issued by employers to employees is also known as Form 16. Form 16 should contain details pertaining to the TDS deducted by an employer from salary and the details of TDS deposited with Government. Taxpayers should note that Form 16 or need not be issued for employees whose total income is less than Rs 2,50,000, as TDS would not be applicable in such cases.

Quarterly TDS Certificate

Quarterly TDS certificates are issued for deduction of TDS on income other than salary and are issued in Form 16A. For instance, the quarterly TDS certificate is issued by banks when TDS is deducted on interest earned by the depositor on fixed deposits.

Due Date for Issuing TDS Certificate

As per the provisions of the Income Tax Act, TDS certificate must be issued by employers to an employee within 15 days of filing their fourth-quarter TDS returns. Hence, Form 16 must be issued within 15 days of filing the fourth quarter TDS returns. The due dates for issuing Form 16A are listed below:

  • For first-quarter of 1st April to  30th June – 15th August
  • For second-quarter of 1st July to 30th September – 15th November
  • For third-quarter of 1st October to 31st December – 15th February
  • For fourth-quarter of 1st January to 31st March – 15th June

Digital Signature

Deductors can digitally sign the TDS certificate using a digital signature certificate. A verified digital signature on a TDS certificate will be supported by a checkmark, in contrast to the unverified one which bears a question mark.

Penalty for Not Issuing TDS Certificate

If a deductor fails to issue TDS certificate within the specified date, he/she will be levied with a penalty of Rs 100 per day for each certificate. The amount of penalty will not exceed the TDS amount for the quarter.

Cross-Verification of Details

The TDS certificate should be verified with Form 26AS. Form 26AS is an annual record which contains details of deduction. Form 26AS can be used to facilitate the cross verification of details stated in the TDS certificate with that of Form 26AS. In the event of any mismatch, the concerned taxpayer must approach the deductor for rectification of the same.