Business

Ask Us

Q. I am working in an NBFC drawing a gross salary of ₹20 lakh p. a. and also getting a pension of ₹5 lakh p.a from my previous employer. Besides, I get interest income from bank deposits and debentures. I-T returns is filed by including all these incomes. The Form No.16 issued by my employer as well as by my previous employer is supported by the relevant TDS entries in my 26 AS. Whenever income tax is deducted from my salary/pension/ interest etc., the gross amount and the TDS deducted are correctly shown in the 26 AS. But, when TDS is not deducted, my 26 AS does not give the details of such incomes, say interest from banks, etc. My pension income was not disclosed in the 26AS statement in FY 2018-2019, since there was no TDS in FY 2018-2019. Regarding interest received from banks, some banks are correctly showing this interest in the 26AS, whether TDS is deducted or not. When the employees approach the bankers for a housing loan, the bankers insist that the Form 16 issued by the employer be taken from the Income Tax website. But many employers are giving the salary certificates physically prepared, since those employers, not having included these employees in their TDS returns filed due to non-deduction of TDS, are not able to take the Form No. 16 from the site. Kindly enlighten on the statutory provisions when TDS is not deducted from such salary/interest paid etc.

M.V. Babu

A. TDS with respect to deductions by banks is covered under Section 194A wherein it is the responsibility of the respective banker to deduct TDS at a rate of 10% (when deductee’s PAN is available) if the interest that is paid or likely to be paid is more than ₹40,000 for non-senior citizens and ₹50,000 for senior citizens. The bank will file TDS returns in Form 26Q mentioning the amount credited and the TDS deducted on the same each quarter. At the year end, they shall provide the deductee with Form 16A, which serves as a certificate for deduction of TDS. Further, if the interest is not exceeding the amounts aforementioned, the TDS is not required to be deducted on the same by the respective banks.

TDS with respect to deductions by employers is covered under Section 192, wherein it is the responsibility of the employer to deduct TDS on the salary/pension disbursed by them to their employees and also taking into consideration income from house property and income from other sources based on the declarations submitted by their employers. Deductions under Chapter VIA and exemptions are also taken into consideration while arriving at the TDS that is to be deducted. The employer will then file Form 24Q mentioning the amount credited and the TDS deducted on the same each quarter. At the year end, they shall provide the employee with Form 16, which serves as a certificate for deduction of TDS. Further, if the total income as per the declarations do not exceed the taxable limits and after considering rebate under Section 87A the TDS is not required to be deducted on the same by the respective employers.

The furnishing of TDS returns are covered under Section 206 of the I-T Act. In either case, if the deductions are within the limits prescribed under the respective TDS provisions, the deductors are not required to deduct TDS and hence will not provide with the deduction certificates.

Q. I am a 54-year-old with a significant corpus in my EPF. I worked continuously for more than 10 years and resigned in May 2016. I applied for withdrawing my PF as a full and final settlement and applied for Form 19 with the EPFO. However, the EPFO has deducted about 10% tax on the corpus amount and transferred the balance amount to my bank. Why did EPFO deduct this tax?

Venkatraman

A. No TDS deduction is applicable at the time of withdrawal if you were in continuous employment for more than 5 years. Further, no tax is attracted on the same in your hands for the same reason.

You may contact the EPFO and your previous employer on this matter to know the reason why tax was deducted and accordingly follow up on this.

(N. Sree Kanth is Partner, GSS Associates, Chartered Accountants, Chennai)

This article is closed for comments.
Please Email the Editor

Printable version | May 16, 2021 2:46:55 PM | https://www.thehindu.com/business/ask-us/article34119852.ece

Next Story