The income tax department has set time limits for issuing of TDS certificates (Form 16 and 16A) by the deductors. Failure to issue TDS certificates by due date can result in penalty of Rs 100 per day of delay per certificate. Employers deducting tax at source are duty-bound to issue TDS certificates in Form 16 to their employees on an annual basis latest by 31st May of the relevant assessment year. The relevant assessment year is the year immediately following the financial year for which the tax has been deducted at source. Other deductors (such as banks which deduct TDS on interest paid on deposits) have to issue the TDS certificates in Form 16A to the deductee on a quarterly basis. The dates by which form 16A must be issued to the deductee are: For quarter 1 – 30th July For quarter 2 – 30th October For quarter 3 – 30th January For quarter 4 – 30th May.
Why TDS? As per the provisions of income tax laws of India, each employer is bound to deduct the tax on behalf of his employee on a monthly basis. On the other hand it is the duty of the employee to report the details of tax deductible investments made by him and also details of any other income to the employer. Entities other than employer, such as Banks, Cooperative Societies, Companies, Business vendors etc, have to deduct tax at source from commercial payment.
It is a summarization of an article from Economic Times. For more information, visit http://economictimes.indiatimes.com/wealth/tax/start-collecting-your-tds-certificates-now-deductors-cant-delay-anymore/articleshow/52532007.cms