new tds deposit rules: The government has eased the rules on the time limit within which companies or deductors have to deposit TDS (deducted from the payments made by them) with the government before a prosecution notice is issued. The standard due date for deposit of TDS with the government is 7th of the month following the month in which it is deducted.
Employees may be concerned that the relaxation in TDS compliance given to companies may affect the timely deposit of tax against their respective PAN.
According to an ET report, recently there have been cases of companies like SpiceJet and Byju’s not depositing TDS on time with the government, as a result of which employees had to face problems. income tax issues.
What are the new TDS deposit rules?
Earlier, companies had 60 days from the original due date to deposit the outstanding TDS (tax deducted at source). However, the new income tax laws starting October 1, 2024 provide additional time to companies to complete the same.
From October 1, companies will have time till the last date of filing TDS returns to deposit TDS with the government. However, if TDS is deposited after the original due date, additional penal interest will have to be paid.
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This effectively gives an additional 20 days to deposit TDS, i.e., 60 days plus an additional 20 days from the original due date.
The Income Tax Department has introduced a new rule regarding prosecution notices for companies failing to deposit TDS by the due date of filing TDS returns.
Earlier the notice was sent 60 days after the due date of deposit of TDS. However, under the new TDS laws, if the company fails to deposit TDS along with penal interest by the deadline for filing TDS return, a notice will be sent immediately. This change is applicable only if the TDS amount exceeds Rs 25 lakh.
New TDS deposit rules explained with examples
To illustrate this change, consider a scenario where a company deducts taxes from an employee’s April pay. The last date for depositing tax deducted in April is May 7, and the last date for filing TDS returns for tax deducted in April, May and June is July 31. Under the earlier laws, if the company failed to deposit the tax deducted by July 7 (60 days from the due date of May 7), the Income Tax Department would send a notice asking why the company should not be prosecuted.
With the new TDS laws, if the company fails to deposit TDS along with penal interest by July 31, the deadline for filing TDS returns, the Income Tax Department will send a prosecution notice.
As per income tax laws, the tax deductor has to deposit the TDS dues on or before the 7th of the following month, except April. For government employees, March TDS is deposited on or before April 7, while for others, it is April 30.
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Should employees be concerned?
The recent amendment in TDS laws provides additional time to companies to deposit TDS with the government. However, concerns have been raised about the potential negative impact on staff.
Many employees don’t review themselves regularly Form 26AS and Annual Information Statement (AIS) to verify whether their employer has deposited the tax deducted from their salary against their PAN during the financial year.
Generally, employees check their Form 26AS and AIS while filing their income tax return next year. When employers fail to deposit TDS, employees are often surprised when they review their Form 26AS and AIS.
Media reports have highlighted instances where Byju’s employees have received tax notices from the Income Tax Department regarding unpaid TDS dues. Recently, SpiceJet admitted that TDS dues between April 2020 and August 2023 were not paid.
ET quoted Pranay Bhatia, partner and leader, corporate tax, tax and regulatory services, BDO India, as saying, “The new TDS laws provide additional time to companies to deposit TDS dues with the government. However, this relaxation does not help companies. will get help.” This will not adversely affect the TDS credit of the employees. If companies fail to deposit the tax deducted on or before the due date of filing TDS return statement, the Income Tax Department can still send prosecution notices to the companies.
Naveen Wadhwa, vice-president, research and advisory division, Taxmann, says, “The relaxation of TDS laws from October 1, 2024 gives companies additional time to deposit TDS with penal interest before prosecution notices are sent. However, the new TDS The law will not adversely affect the TDS credit against PAN of employees.”
Recent reports have highlighted instances where employers have withheld TDS from their employees’ salaries but failed to remit the funds to the government. As a result, many employees faced difficulties in claiming TDS credit while submitting their income tax returns.
According to Wadhwa, “Section 205 of the Income Tax Act prohibits recovery of tax from taxpayers provided tax has been deducted from their salary or any other income but has not been deposited with the tax department. However, the taxpayers are required to submit proof to the Income Tax Department. It has to be given that tax has been deducted from their salary.”
By submitting proof of TDS deduction, individuals can ensure that they receive appropriate TDS credit and avoid any additional tax liability.
