When and how to issue TDS certificates

A deductor must issue TDS certificates to the deductee for deduction of tax at source. To get started, the person who has to deduct tax must first obtain TAN or Tax Deduction and Collection Account number.

Newly registered companies are not required to apply for TAN separately as it gets allotted at the time of company registration. To know your company TAN, please check your certificate of incorporation issued by ministry of corporate affairs. Those companies which are registered prior to this allotment process are required to apply for TAN by using form 49B.

Type of TDS certificates

Generally the deductor issues following two type of TDS certificates;

  • Form 16 – it has to be furnished when you have deducted tax as a employer from your employee’s salary
  • Form 16A – it has to be issued in all cases other than salary payments where TDS amount has been deducted

Apart from these two certificates, you are also required to issue certificate in form 16B if TDS has been deducted under section 194IA for payments towards acquiring immovable property. Section 194IA requires you to deduct tax at the rate of 1% while buying immovable property other than agricultural land where sales consideration is Rs. 50,00,000 or more.

Time limit for issuing TDS certificates

Deductor has to issue TDS certificate on or before the due dates as specified for each certificate.

In case of TDS certificate in form 16, which is issued by the employer to the employee, the due date to issue is 31st May of the following year relevant to the financial year in which TDS has been deducted out of employee’s salary. For instance, if TDS has been deducted out of salary paid during the financial year 2017-2018, then the certificate in form 16 has to be issued on or before 31st May 2019.

All other deductors who have deducted tax from payments other than salary, have to issue TDS certificate in form 16A to the deductee on a quarterly basis. This means Form 16A has to be issued in cases where tax has been deducted from payments other than salary.

Form 16A has to be issued within one month from the end of the relevant quarter. For instance in case of the 1st quarter (period starting from April to June), form 16A has to be issued by 30th July. Similarly for the 2nd quarter (period starting from july to september) and 3rd quarter (period starting from october to december) the due date is 30th october and 30th january respectively. For the 4th quarter, that is the period starting from January to March, the due date is 30th May.

In case of salary, TDS certificate has to be issued annual basis not for every quarter.

Form 16 and 16A has to be downloaded from traces portal by the deductor by using his registered ID and password. After downloading, digitally signed certificates can be sent to the deductee.

If you as a deductor fail to issue TDS certificate within the due dates as specified above, then a penalty of Rs. 100 per day for each certificate may be levied for the time of default. However, the amount of penalty will not exceed the TDS amount of the quarter.

As a deductee, you must ensure that these TDS certificates are downloaded from traces portal and is having correct details as per your record.

Form 16B can also be downloaded from traces portal by using the acknowledgement number generated while filing challan 26QB. Every person responsible for deducting tax under section 194IA, is required to furnish TDS certificate in form 16B to the payee within 15 days from the due date of filing 26QB. Form 26QB has to be filed within 30 days from the end of the month in which deduction is made. If you are paying total consideration in installments, then for each such installment, you are required to issue form 16B after making payments.

It is the duty of the deductee to provide permanent account number to the deductor. In absence of PAN, the deductor has to deduct tax at a higher rate. In this case, deductee will not get tax credit from the deductor as the later will not be having PAN of the former to assign the deducted amount while filing quarterly TDS return with the government.

is a fellow member of the Institute of Chartered Accountants of India. He lives in Bhubaneswar, India. He writes about personal finance, income tax, goods and services tax (GST), company law and other topics on finance. Follow him on facebook or instagram or twitter.