New TDS Deposit Rules: The authorities has eased the laws surrounding the timeframe inside which firms or deductors should deposit TDS (deducted from funds made by them) with the federal government earlier than a prosecution discover is issued. The commonplace due date for depositing TDS with the federal government is the seventh of the month following the month through which it’s deducted.
Employees could be involved that the relief in TDS compliance granted to firms might have an effect on the well timed deposit of the tax in opposition to their respective PANs.
According to an ET report, there have been current situations of firms, equivalent to SpiceJet and Byju’s, not depositing TDS with the federal government on time, leading to workers encountering earnings tax points.
What are the new TDS Deposit Rules?
Previously, firms had 60 days from the unique due date to deposit the excellent TDS (tax deducted at supply). However, beginning from October 1, 2024, the new earnings tax legal guidelines present firms with further time to perform this.
From October 1 onwards, firms may have till the deadline to file the TDS return to deposit TDS with the federal government. Nevertheless, if the TDS is deposited after the unique due date, penal curiosity must be paid as well as.
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This successfully grants an additional 20 days to make the TDS deposit, i.e., 60 days from the unique due date plus a further 20 days.
The earnings tax division has launched a new rule concerning the prosecution discover for firms that fail to deposit the TDS by the due date for submitting the TDS return.
Previously, the discover would be despatched after 60 days from the due date for depositing the TDS. However, beneath the new TDS legal guidelines, the discover will be despatched instantly if the corporate fails to deposit the TDS, together with the penal curiosity, by the TDS return submitting deadline. This change applies provided that the TDS quantity exceeds Rs 25 lakh.
New TDS Deposit Rules Explained with Example
To illustrate this transformation, contemplate a state of affairs the place an organization deducts tax from an worker’s April wage. The final date to deposit the tax deducted in April is May 7, and the final date to file the TDS return for the tax deducted in April, May, and June is July 31. Under the sooner legal guidelines, if the corporate didn’t deposit the tax deducted by July 7 (60 days from the due date of May 7), the earnings tax division would ship a discover asking why the corporate mustn’t be prosecuted.
With the new TDS legal guidelines, the earnings tax division will ship the prosecution discover if the corporate fails to deposit the TDS, together with the penal curiosity, by July 31, the TDS return submitting deadline.
According to the earnings tax legal guidelines, the tax deductor should deposit the TDS dues on or earlier than the seventh of the next month, with an exception in April. For authorities workers, the March TDS is deposited on or earlier than April 7, whereas for others, it’s April 30.
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Should workers be worried?
The current amendments to the TDS legal guidelines present firms with further time to deposit the TDS with the federal government. However, issues have been raised about the potential unfavourable affect on workers.
Many workers don’t recurrently assessment their Form 26AS and Annual Information Statement (AIS) through the monetary yr to confirm if their employer has deposited the tax deducted from their wage in opposition to their PAN.
Typically, workers verify their Form 26AS and AIS within the following yr whereas submitting their earnings tax returns. When employers fail to deposit the TDS, workers are sometimes stunned after they assessment their Form 26AS and AIS.
Media experiences have highlighted situations the place workers of Byju’s obtained tax notices from the earnings tax division concerning unpaid TDS dues. Recently, SpiceJet acknowledged that TDS dues remained unpaid between April 2020 and August 2023.
Pranay Bhatia, Partner & Leader, Corporate Tax, Tax & Regulatory Services, BDO India, was quoted as saying by ET, “The new TDS laws provide extra time for companies to deposit TDS dues with the government. While this relaxation will help companies, it will not adversely affect the employees’ TDS credit. The income tax department can still send the prosecution notice to the companies if they fail to deposit the tax deducted on or before the due date to file TDS return statement.”
Naveen Wadhwa, Vice President of Research and Advisory Division, Taxmann, provides, “The relaxation of TDS laws from October 1, 2024, offers companies extra time to deposit TDS along with the penal interest before the prosecution notice is sent. However, the new TDS laws will not adversely impact employees’ TDS credit against their PAN.”
Recent experiences have highlighted situations the place employers have withheld TDS from their workers’ salaries however didn’t remit the funds to the federal government. As a outcome, quite a few workers confronted difficulties in claiming TDS credit score when submitting their earnings tax returns.
According to Wadhwa, “Section 205 of the Income-tax Act prohibits tax recovery from taxpayers, provided tax is deducted from their salary or any other income but not deposited with the tax department. However, taxpayers must provide proof to the income tax department that tax has been deducted from their salary.”
By furnishing proof of TDS deductions, people can guarantee they obtain the suitable TDS credit score and forestall any further tax liabilities.
