Starting October 1, 2024, new rules on Tax Deducted at Source ( TDS ) have relaxed the deposit deadlines for employers. Under these revised rules, companies now have additional time to deposit TDS and associated penal interest with the government before facing a prosecution notice.
Previously, employers were required to deposit TDS within 60 days from the original due date, typically the 7th of the month following the deduction. With the new income tax laws, employers are allowed up to the deadline for filing the TDS return to make the deposit—an additional 20 days beyond the original 60-day extension period. This essentially means companies have more time to fulfil their TDS obligations, albeit with the payment of penal interest for delayed deposits.
Get a Handbook on TDS Including TCS as Amended up to Finance Act 2024, Click Here
The income tax department has also modified the timeline for sending prosecution notices. If a company fails to deposit TDS by the TDS return filing deadline, which occurs quarterly, the department will now issue a prosecution notice. Previously, this notice would have been sent after 60 days from the initial due date for the TDS deposit, making the current timeline less stringent in the initial stages but ultimately stricter if TDS remains unpaid.
For employees, this change might seem concerning, as it could delay the proper reflection of TDS deposits in their Form 26AS or Annual Information Statement ( AIS ). Employees generally rely on these documents to verify their tax deductions while filing their income tax returns.
Get a Handbook on TDS Including TCS as Amended up to Finance Act 2024, Click Here
Delays in the deposit by employers, as seen recently with companies like SpiceJet and Byju’s, could lead to discrepancies that create confusion or issues when employees file their taxes.
An example of the timeline under the new rules can help clarify the change: if an employer deducts TDS from an employee’s salary in April, the usual deadline for depositing this amount would be May 7. With the revised rules, companies now have until July 31—when the quarterly TDS return is due—to deposit the deducted tax.
However, if TDS is not deposited by this extended date, the company will receive a prosecution notice, assuming the outstanding TDS exceeds Rs 25 lakh.
Get a Handbook on TDS Including TCS as Amended up to Finance Act 2024, Click Here
While these relaxed deadlines give employers more flexibility, employees must remain vigilant. It is advisable for employees to regularly monitor their Form 26AS and AIS to ensure their employer is meeting TDS obligations on time. Failure to do so could result in surprises during tax filing, potentially impacting refunds or creating liability issues.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
