Employers will have more time to deduct TDS from employees’ salaries from October 1. The new rule provides additional time for employers to file TDS with the government From October 1. Experts clarified that the new rules will not adversely affect the TDS status of employees as there were many concerns raised about the potential impact on employee TDS credits.
Relaxation in TDS withholding rules for employers
From October 1, 2024, employers will have more time to deduct TDS from employees’ salaries. Under the amended rules, TDS can be deposited till the deadline for filing TDS returns, extending the period up to an additional 20 days. Earlier, companies had 60 days to deposit before sending a charge notice, but under the new rules, they have until the deadline to file their TDS returns and they have avoided punishment.
Effect of TDS credit on employees
Despite extending the limitation period, employees can't avail of TDS credits. Companies like SpiceJet and Baiju have been delaying TDS deposits, raising concerns in the wake of incidents of tax challenges for employees. But tax experts insisted that even if companies fail to file TDS on time, the government can issue prosecution notices, ensuring that employee credit remains intact.
What happens if TDS is not deposited?
Employees cannot claim TDS credit if the employer deducts TDS but fails to deposit. In such cases, Section 205 of the Income Tax Act protects the employees from double taxation, if they can prove that TDS has been deducted from their income. Employees should check their Form 26AS and AIS to ensure the correct deposit of TDS.
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