Latest news with #e-TDS
Deccan Herald
5 days ago
- Business
- Deccan Herald
Form 16: When to expect it and why it matters for salaried employees?
As per income tax rules, employers are required to file their e-TDS returns for the last quarter (January to March) by May 31. After this, they get 15 days to issue Form 16.
Time of India
29-05-2025
- Business
- Time of India
When will salaried employees get Form 16 to file income tax return for FY 2024-25 (AY 2025-26)?
Many salaried employees are waiting to receive Form 16, a TDS Certificate, from their employer. Form 16 is an important TDS certificate that contains details of the salary income paid to the employee during the financial year, tax regime opted for tax deduction at source, and deductions and exemptions that the employee has claimed from the salary income (depending on the tax regime). The certificate, of course, contains details of the TDS from the salary, which is one of the main reasons it is needed for filing one's Income Tax Return (ITR). ET Wealth Online tells you when you can expect to get Form 16, what to check in it, and what to do if you do not get it. Is there a last date for employers to issue Form 16 to salaried employees? According to income tax rules, employers must file their e-TDS return for the January-March quarter of a financial year, latest by May 31 of the next FY. Once the e-TDS return is filed, the tax deductor is required to issue the TDS certificate within 15 days of filing the eTDS return, i.e. latest by June 15. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like ¿Artritis? Especialista le pide a los colombianos que hagan esto antes de dormir Alivio del dolor Mirar Ahora Undo Also Read: ITR filing deadline extended to September 15, 2025, for FY 2024-25 (AY 2025-26) Shubham Jain, Associate Director, Nangia Andersen India - a tax consulting firm, says, "Form 16 is a certificate of tax deducted at source by the employer on behalf of the employee. In cases where an employer deducts tax at source on salaries, it is mandatory to issue Form 16 by June 15. Failure to issue Form 16 in a timely manner attracts a penalty of Rs 500 per day for each day of default. The maximum penalty can be up to the amount of TDS deducted by the employer. The employer is required to deposit the penalty amount directly into the credit of the Central Government. The penalty is a cost to the employer but not really available for claim by the employee." Live Events Can you file ITR without Form 16? Filing income tax return with Form 16 is easier. However, a taxpayer can file income tax return without having Form 16. If you do not have Form 16, then you must collect and rely on other documents for information/proof such as salary slips, Annual Information Statement (AIS) and Form 26AS to file income tax return. Can you download Form 16 from the Income Tax Department's website using PAN? A salaried employee cannot download Form 16 from the Income Tax Department's website, either by using his/her PAN or the deductor's PAN. Only the deductor can issue Form 16 to the employee or the deductee. The deductor can also issue the Form 16 only after downloading it from the TRACES portal. To put it simply, Form 16 of all employees of a single employer is generated from and only after the e-TDS return is filed by the employer. This is because the information in the Form 16 is sourced from the e-TDS return filed by the employer. Also Read: Can you claim LTA tax exemption in new tax regime? Who will get Form 16 from their employer? An employer will issue Form 16 to its employee if the former has deducted tax on the salary income paid to the employee. As per the income tax rules applicable for FY 2024-25 (between April 1, 2024, and March 31, 2025), zero tax is payable under the new tax regime if taxable income does not exceed Rs 7 lakh. Similarly, if the taxable income does not exceed Rs 5 lakh, then no tax will be deducted by the employer if the employee has opted for the old tax regime for FY 2024-25. Hence, depending on your net taxable salary and tax regime chosen by you, if there is no tax deducted by the employer, then it may not issue Form 16 to you. Jain says, "Form 16 is a certificate showing TDS deducted by the employer; accordingly, in case no tax is required to be deducted because of low salary, issuance of Form 16 by the employer is also not mandatory. Thus, though legally not required, an employer may still choose to issue a NIL TDS Form 16 to the employee." What to check in Form 16 and other TDS certificates An employee should check certain things in the Form 16 received. There are two parts of Form 16 - Part A and Part B. Part A of Form 16 contains details of the employee and employer, such as name, address, PAN, TAN, etc., and tax deducted in the four quarters of the financial year. Part B of Form 16 contains details of the total income paid by the employer to the employee during the financial year. It also contains the tax regime opted for, deducting tax on salary during the financial year, deductions and exemptions that are claimed, as per the tax regime. Both parts of Form 16 will have the TRACES logo if they have been downloaded from that site, which is a legal requirement. What is the password to open Form 16? Form 16 is usually, but not always, a password-protected file. The password can be your PAN (in lower or uppercase), your date of birth (DD/MM/YY), or a combination of PAN (lower or uppercase) and date of birth. You should check your email to see if Form 16 is password protected and what the password is. Can you have two Form 16s for a single financial year? Yes, a salaried employee can have two or more Form 16s in a single financial year. This will happen if you have switched jobs during the relevant financial year. In such a case, each employer would issue you a separate Form 16 for the time period that you worked with that employer.
Mint
21-04-2025
- Business
- Mint
TDS on rent and contract work: How small taxpayers can avoid penalties
When a young Mumbai-based couple bought an apartment from a seller who resides outside India, they ensured that they fully complied with the rules on tax deducted at source (TDS). They deducted the tax at source at the higher 31.2% rate (includes cess) applicable to non-resident Indian (NRI) sellers and submitted it to the tax authorities on time. However, they missed one additional step: filing an e-TDS return. Consequently, the couple, who did not wish to be named, was slapped with a penalty of ₹ 80,000. Many individuals like this couple face penalties and interest charges each year due to missed steps in TDS compliance, often stemming from limited awareness. After the TDS amount is submitted, the deductor has to file the return within the last date of the quarter in which TDS is deducted (the 31st of July, October, January and March). The penalty for this default is a severe ₹ 200 per day, capped at the TDS amount. The TDS rate in the case of NRI property sellers is quite high at 31.2%, which means the cap equivalent to the TDS amount for the ₹ 200 daily penalty doesn't really help the tenant when the landlord is an NRI. The couple was late in filing e-TDS by seven months, which added up to about ₹ 40,000 for both individuals. Since they bought the property jointly, both were required to deduct TDS and file the return separately. Hence, they both paid a combined penalty of ₹ 80,000 for this slip-up. Individuals and HUFs that are not liable for tax audits were first brought under the purview of TDS in 2013 with the introduction of Section 194-IA that deals with tax deducted at source on the purchase of immovable property . Gradually, more sections on other types of payments were added to broaden the tax base. Mint lists out some key TDS provisions that small taxpayers should be aware of to avoid paying penalties through their nose. Being a tenant to an NRI landlord is a full-time job with multiple compliances. The tenant has to get TAN (tax deduction and collection account number) and mandatorily deduct 31.2% TDS (includes cess; applicable surcharge also to be added) on the rent every month, regardless of the rent amount. It must be deposited to the Income Tax (IT) department by 7th of the following month using Form 27Q. Next, the tenant must file a quarterly e-TDS return. 'Once the return is filed, the tenant must generate and issue a Form 16A to the NRI landlord — this is the TDS certificate showing tax deducted and deposited," said Ajay R. Vaswani, founder, ARAS and Company, Chartered Accountants. 'In contrast, when rent is paid to a resident landlord above ₹ 50,000 per month, the tenant can simply fill Form 26QC online, pay 5% TDS once in a year and be done — no TAN, no quarterly returns, no Form 16A. But for NRI landlords, even a simple rental agreement becomes a full-blown TDS compliance project for the tenant," said Vaswani. The tricky part is that the onus of verifying whether the landlord is a resident or non-resident is on the tenant. 'The tenant should ask for a self-declaration copy. If it turns out later that the landlord was an NRI and tax wasn't deducted properly, the tenant bears the brunt," Vaswani said. Also Read: New TDS rules for partnership firms: What you need to know When a person or entity engages a contractor for any type of work, TDS will be deducted under Section 194C and 194M. 194C is applicable to anyone engaging a contractor for construction, repair work or any other contractual services where the total payment is over ₹ 1 lakh in a year or a single payment is over ₹ 30,000. Chirag Wadhwa, proprietor at Wadhwa Chirag & Associates, Chartered Accountants said for individuals and Hindu Undivided Family (HUF) engaged into business or profession, it is only when their previous year's annual turnover exceeds ₹ 1 crore (in the case of business) or ₹ 50 lakh (for professionals) that they have to deduct TDS under 194C. 'In the case of any other entity, even if there is no audit requirement, TDS under 194C applies," he said. It should be noted that TDS is to be deducted on oral contracts also, even when there is no formal written agreement. '194C gets attracted to even mundane payments like advertisement, courier, house-keeping services, pest control and catering, among others," Wadhwa added. TDS rate is 2% when the recipient is an entity and 1% if it's an individual. 194C compliance mainly affects small entities like housing co-operations, charitable institutions and small proprietor firms. For instance, a small housing committee with less than 20 apartments may not have a full-time CA. So the committee head will have to volunteer to get TAN, which is mandatory for 194C TDS, and deposit the TDS each time a payment is made to the several contractors they may hire, like security, horticulturist, for maintenance work etc. What if a businessman is hiring a contractor to construct his personal house? In this case, section 194M comes in. TDS under 194M is for individuals and HUF who don't fall under 194C. '194M is applicable under two conditions – individual or HUF turnover is below the ₹ 1 crore/ ₹ 50 lakh threshold or even if they are liable for audit but are engaging a contractor for a personal purpose," said Wadhwa. So, a businessman building his own house comes under 194M as he/she fulfils the second condition. Bhawna Kakkar, CA and founder, Kakkar & Company, Chartered Accountants says section 194C is well-known among businesses as CAs typically ensure TDS compliance during audits. However, Section 194M is less commonly followed. 'It applies even to salaried persons if they make high-value payments for professional or contractual services. Since it doesn't require a TAN and often arises in personal transactions, awareness and compliance remain quite low." TDS under 194M is deducted at 5% rate if the aggregate amount of payments exceeds ₹ 50 lakh in a year. Some common contractual services that concern most individuals are constructing a house, hiring an interior decorator, paying a wedding planner or event manager, hiring a lawyer or any other professional, etc. 'The ₹ 50 lakh limit is per year and when it is breached, the payer has to deduct TDS even for the earlier payments (out of the subsequent payments to be released). He cannot deduct TDS from the first payment itself," said Prakash Hegde, Bangalore-based chartered accountant. Kakkar said for both 194C and 194M, each deduction requires a corresponding TDS return filing. 'For 194C, each time TDS is deducted, you'll need to file Form 26Q quarterly, reflecting all payments and TDS deducted. 194M is a challan cum statement deduction that is submitted along with TDS deposit. For this only PAN is sufficient for deductor as well as deductee." Also Read: Relying on rental income in retirement? Take these steps to protect yourself. Failure to deduct TDS carries severe penalties. A 1% monthly interest applies for non-deduction, 1.5% interest when TDS is deducted but not deposited and for delays in filing e-TDS return or challan cum statement, ₹ 200 per day, capped at TDS amount, until the return is filed. These penalties apply to all TDS provisions. TDS non-compliance is a running risk as the interest and penalties are slapped only when the income tax (IT) department flags a default. 'With the income tax department increasingly relying on data from various sources, including the Statement of Financial Transactions (SFT) that captures cash receipts above ₹ 2 lakh, such payments can easily be flagged, potentially leading to demand for tax along with interest and penalty," said Kakkar. However, in the case of NRIs, the consequences of non-compliance are more severe. 'In case of non-compliance, the tenant could become 'assessee-in-default". This means the tenant could be forced to pay the entire TDS amount out of their own pocket, even if the rent was already paid out," Vaswani explained. Over and above the penal interest and ₹ 200 daily fee for non-filing of return, tenants to NRI landlords can also be face additional penalty up to the full amount of TDS under Section 271C and even prosecution under Section 276B for willful default when the TDS is deducted but not deposited with the government, as per Vaswani. 'Unless the landlord later pays full tax and files a return, the burden stays on the tenant." Hegde said the ₹ 200 per day fee for non-filing default, especially, is quite an expensive one. He said property buyers quite often cough up this fee for many of the previous instalments in cases where they pay several installments when buying from a builder. 'When buying a house, under Section 194IA, the buyer has to deduct 1% TDS on the total amount if it exceeds ₹ 50 lakh or more. Now, in case of several instalments, the buyer has to deduct and deposit the same using a challan-cum-statement of TDS in Form 26QB for each installment, which the builders may not inform buyers. Say, if there are eight instalments over three years and the buyer doesn't realise until the final instalment, the ₹ 200 daily fee on the first instalment will add up over three years, capped at the TDS amount. The same will apply to all seven instalments missed." In the first such instance, the tax department recently sent notices to many tenants claiming HRA for not deducting TDS. It is expected that the IT department could impose large-scale enforcement for other TDS provisions too in the coming years. Also Read: Claimed HRA but skipped TDS on rent? The taxman wants answers
