When is tax to be deducted
Section 192 casts the responsibility on the employer, of tax deduction at source, at the time of actual payment of salary to the employee. Thus, when advance salary and arrears of salary are paid, the employer has to take the same into account while computing the tax deductible.
Rate of deduction of tax
As per Section 192, the employer is required to compute at the beginning of the financial year, the total salary income payable to an employee during the financial year. Further, the employer should also take into account any other income as reported by the employee. After considering the incomes exempt, deductions, rebate and relief, the tax liablity of the employee should be determined on the basis of the rates in force for the financial year. Every month, 1/12 of this net tax liability is required to be deducted.
A deductor can make adjustments for any excess or shortfall in the deduction of tax already made during the financial year, in the subsequent deductions. For instance, in the case where payment of advance salary, arrears of salary, or increase of salary, commission, bonus, etc. has taken place, the tax liability of the employee will increase. Deduction of tax at source is accordingly required to be increased. Similarly, if the employee makes certain investments which qualify for deduction or rebate and furnishes the required proof which reduces the tax liability, then the employer can accordingly reduce the quantum of TDS.
Challan of Payment
Where a deduction is made by or on behalf of the Government, the amount is to be credited in the manner specified. In case of other deductors, the deposition of TDS is to be made vide challan No.ITNS 281. The deductor must ensure that the details like employer's name and address, PAN, TAN, the Assessing Officer having jurisdiction, the amount of tax, the date of payment, the salary from which TDS has been done and the tax which is being paid, are correctly filled. Where TDS is credited to Government account through book adjustments, care should be taken by the DDOs to ensure that the correct amount of income tax is reflected therein.
Issue of T.D.S. Certificate
Every person deducting tax at source is required as per Section 203 to furnish a certificate to the payee to the effect that tax has been deducted alongwith certain other particulars. This certificate, usually called the TDS certificate, has to be furnished within a period of one month from the end of the relevant financial year. Even the banks deducting tax at the time of payment of pension are required to issue such certificates. In case of employees receiving salary income including pension, the certificate has to be issued in form No.16. The certificate is to be issued in the deductor's own stationery. However, there is no obligation to issue TDS certificate in case of tax at source is not deducted /deductible by virtue of claims of exemptions/ deductions.
Issue of duplicate certificate
Where the original TDS certificate is lost, the employee can approach the employer for issue of a duplicate TDS certificate. The employer may issue a duplicate certificate on a plain paper giving the necessary details as contained in Form No.16(Relevant Rule-31(4)).
Tax Deduction Number TAN
T.A.N. or tax deduction account number is a unique number alloted to the deductor of tax at source for the purpose of identification of every deductor. Every person deducting tax at source is required as per Section 203A to apply to the assessing officer for allotment of TAN. The application has to be made in duplicate in form 49B within one month from the end of the month in which tax was deducted at source(Rule 114A). Such application has to be either furnished to the AO specifically assigned the function of allotment of TAN by the CCIT/CIT or in any other case to the AO having jurisdiction to assess the applicant.
Frequently Asked Questions
Q-1. I have not received TDS certificate from my employer. Can I claim TDS deducted from my salary?
Yes. The claim can be made in your return. Department however will raise a demand which will not be enforced on you but on your employer.
Q-2. If the employer does not deduct tax and employee also does not pay his due tax, who will be held responsible for tax payment?
The ultimate responsibility to pay tax rests on the person who has earned income. If the employee deposits such tax then the employer will be liable for interest and penalty for failure to deduct tax.
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Q-3. In case the deductee comes back stating that the original TDS certificate is lost, whether a duplicate certificate can be issued?
Yes. The deductor will have to issue the certificate in a plain paper giving necessary details of deduction and remittance.