Salary TDS Return & Form 16
It is very important for employees and employers to know about the intricacies of Salary TDS (Tax Deducted at Source) Return and Form 16 and its complexities. Because all these elements act as a backbone in the tax deduction and filing process which ensures compliance with all the rules and regulations of the income tax department.
In this article written by Blackty Legal Services, we will discuss in detail the aspects included in Salary TDS Return and Form 16, their importance and the processes used to handle them.
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What is Salary TDS Return and Form 16 ?
Salary TDS return is a kind of quarterly statement filed to report the TDS deducted from the salary of employees and deposited with the government.
Employers deduct TDS from employees based on the applicable income tax slab, submit the deducted cost to the government on a monthly basis, and then file TDS returns using Form 24Q.
Form 16 is a kind of certificate issued by the employees on annual basis which contains the details of TDS and total salary paid during the financial year. Which serves as a certificate of TDS and income for an employee to file credit return personally.
Salary TDS return and Form 16 comes under which act ?
Salary TDS return and Form 16 was governed by the government under the Income Tax Act, 1961, especially TDS on salary is covered under section 192 of the government. The law of TDS return and Form 16 mandates deduction of taxes at source and collection of appropriate tax for salaried individuals.
And all employees working within the country must ensure to follow all these provisions to avoid penalties and ensure smooth tax administration.
Eligibility criteria of Salary TDS return and Form 16
For Employers
All employers, who pay salaries to all their employees, need to file and pay TDS from their salaries, this includes:
- Businesses: public companies, sole proprietorships and Private companies.
- Organizations: Societies, trusts and non profit organisations.
- Government Entities: local authorities, Central and state government departments and public sector undertakings.
Every employer must have a valid TAN (Tax Deduction and Collection Account Number) and must comply with the TDS provisions mentioned in the Income Tax Act, 1961.
For Employees
Any salaried individual whose income exceeds the basic exemption limit prescribed under the Income Tax Act will be obliged to use TDS. The basic exemption limit for each employee varies according to the age and category of the taxpayer.
- General Category: ₹2.5 lakh for individuals below 60 years of age.
- Senior Citizens:₹3 lakh for individuals between 60 and 80 years of age.
- Super Senior Citizens: ₹5 lakh for individuals above 80 years of age.
- All employees have to provide their PAN number to their employer so that their proper TDS deduction and credit can be ensured.
Benefits of Salary TDS return and form 16
Benefits of TDS return
- Compliance: This ensures that all employers are protected as much as possible from legal issues and punishments and comply with all tax regulations scrupulously.
- Transparency: Demonstrates transparency in salary tax deduction and disbursement
- Accurate Records: TDS is of great help to both employees and employers in maintaining accurate financial records.
- Government Revenue: TDS ensures timely and systematic collection of all taxes contributed in government revenue.
Benefits of form 16
- Proof of Income: Form 16 serves as a proof of income and TDS deduction for all employees.
- Loan Applications: It is very useful to verify the income when an employee applies for a loan or credit card.
- Financial Planning: It helps all employees a lot in planning their finances and understanding their tax liabilities better.
Documents required for filling Salary TDS return and form 16
The documents for TDS Return and Form 16 are different for both employers and employees as mentioned below:
Required Documents for Filing TDS Return
- TAN (Tax Deduction and Collection Account Number)
- Form 24Q
- Challan Details
- Employee Details
- Tax Computation Sheets
- DSC (Digital Signature Certificate)
- PAN (Permanent Account Number
Required Documents for Filing Form 16
- Salary Slips
- TDS Deduction Details
- Investment Proofs
- Perquisites and Allowances
- Exemption Proofs
- DSC (Digital Signature Certificate)
- PAN (Permanent Account Number
Process of Salary TDS Return and Form 16
1. TDS Deduction
Calculation
Employers calculate TDS on the basis of salary of all employees, applicable income tax slab and deduction declared by the employee under different sections like 80 C and 80 D etc.
Monthly Deduction
TDS is deducted from the monthly salary of the employees. The total cost of this deduction depends entirely on an employee’s gross annual income and the applicable tax law.
2. Filing Quarterly TDS Returns (Form 24Q)
Preparation
Employers prepare Form 24Q in full detail, including details of TDS deducted and total salary paid to each employee.
Filing
Form 24Q is mostly filed on quarterly basis and its due dates are mentioned below:
- Q1 (April-June): July 31
- Q2 (July-September): October 31
- Q3 (October-December): January 31
- Q4 (January-March): May 31
Submission
The form TIN-NSDL can be filled online through NSDL (Tax Information Network – National Securities Depository Limited) websites and designated TDS Facilitation Centres.
3. Payment of TDS
Challan 281
The employer will have to submit the TDS deducted from the employee’s salary using challan 281 to the government through designated bank branches or online banking.
Due Dates
The date for filing TDS is 7th of every month and for the month of March the time period has been extended till 30th April.
4. Generation and Issuance of Form 16
Part A
Generated from the TRACES (TDS Reconciliation Analysis and Reforms Enabling System) portal, Part A contains details of the employer and employee, a summary of TDS deposited and deducted, and certified by the employer.
Part B
It is prepared by the employer, Part B provides a detailed breakdown of an employee’s overall income, exemptions and tax calculations and Form B includes allowances, gross salary and gross salary.
Distribution
Form 16 must be issued by 31st May of the employee’s assessment year. These can be provided only in electronic form or in physical form, which can be sent through email, then through hard copy.
By following all these steps in a proper manner, an employee and employer can ensure compliance, collection and proper documentation of the Income Tax Act.
What We Offer?
Blacktie can provide a variety of services to help you with salary TDS return and Form 16. Here’s a breakdown of some key services:
TDS Calculation and Management:
- Blacktie can help you calculate the appropriate TDS amount based on your salary structure, investment declarations, and tax regime (old or new).
- We manage the TDS deposit process with the government on your behalf, ensuring timely and accurate deductions.
Form 16 Assistance:
- Blacktie can help you understand the details mentioned in your Form 16, including salary breakup, tax deductions, and any discrepancies.
- we even offer assistance in rectifying any errors found in your Form 16 by contacting your employer.
Income Tax Return (ITR) Filing:
- BlackTie offering TDS and Form 16 services can also assist with filing your income tax return (ITR).
- We can help you understand which ITR form applies to you, gather relevant documents, and ensure accurate data entry to minimize errors.
Additional Services:
- Some companies might offer tax planning services to help you optimize your tax liability through deductions and investments.
- They may also provide support with claiming tax refunds if applicable based on your tax situation.
By utilizing the services offered by Black Tie, you can streamline the process of managing your salary TDS, understanding your Form 16, and filing your income tax return efficiently.