What if Employer / Deductor refuse to issue TDS Certificate / Form 16 / Form 16A?

Issue of TDS Certificate

According to the provisions of section 203, of the Income Tax Act,1961, every person responsible for deducting tax at source with the foregoing provisions shall within such period as may be prescribed, is required to furnish a certificate to the payee to the effect that tax has been deducted and to specify therein the amount deducted and certain other particulars. This certificate, usually called the “TDS certificate”. Even the banks deducting tax at the time of payment of pension are required to issue such certificates. In the case of employees receiving salary income (including pension), the certificate has to be issued in Form No. 16 and in any other case Form No.16A. It is, however, clarified that there is no obligation to issue the TDS certificate (Form 16 or Form 16A) in case tax at source is not deductible/deducted by virtue of claims of exemptions and deductions.

As per section 192, the responsibility of providing correct and complete particulars of perquisites or profits in lieu of salary given to an employee is placed on the person responsible for paying such income i.e., the person responsible for deducting tax at source. The form and manner of such particulars are prescribed in rule 26A, Form 12BA, Form 16 and Form 16A of the Income-tax Rules. For correct deduction of tax employee is required to submit Investment Declaration Form in the beginning of financial year stating the tax saving investments he is proposing to take.

Time Limit of Issue of TDS Certificate

Particulars TDS on Salary TDS on Non-Salary
Form Form No. 16 Form No. 16A
Periodicity Annual Quarterly
Due Date upto which TDS certificate should be issued 31st May of the following relevant Financial Year  15 days from the due date of furnishing of TDS return i.e. 3oth July, 30th October, 30the January and 30th May
  • The prescribed income tax authority or the Authorized Agency shall within the prescribed time after the end of each financial year prepare and deliver to every person from whose income tax has been deducted, a statement in the prescribed from specifying the amount of tax deducted during the Financial year (Form 26AS) as stated under section 203AA.
  • Where any tax has been deducted an paid to the Central Government, the amount of tax deducted an specified in the statement referred to in section 203AA shall be treated as tax paid by the person from whose income the tax has been deducted and credit shall be given to him under section 199(3) for the amount so deducted in the assessment for the assessment year in which such income is assessable without the production of TDS certificate.

What if deductor/employer refuses to Issue TDS Certificate?

TDS Certificate Non-Issuance PenaltyFor non issuance of TDS Certificate within a prescribed time, penalty is imposable u/s 272A (2) @ Rs. 100/- per day during which the failure continues. However, in respect of the amount of penalty for failure in relation to furnishing of TDS/TCS certificate, cannot exceed the amount of tax deductible/deducted.

What Remedy available for payee/deductee if TDS certificate is not issued?

Write a letter to the Deductor incorporating:

  • The details of payments done to you and the tax deducted there from.
  • Provision of Section 203 which requires the Deductor for issue of tax certificate within one month from the date of tax deduction

Keep the proof of letter issued to the Deductor.

If despite this, the certificate is not issued, write a letter to Joint Commissioner or Additional CIT of TDS wing who has jurisdiction over the Deductor mentioning the detailed facts elaborated above.

The employee however has no other legal remedy against his employer in case he refuses to issue the certificate.

Few FAQ’s

Although my previous employer not issued TDS certificate for the TDS deducted by them, can I claim the credit for TDS deducted by them while filing my IT return?

Yes. The claim can be made in your return. Department however will raise a demand which will not be enforced on you but on your employer.

Can Employer Decline to Issue Form 16 When there is no deduction of TDS on Salary?

Confusion arises among employees regarding Form 16 is on following grounds:

  • That they think Form 16 is a salary certificate.
  •  That income tax Return cannot be filed in absence of Form 16.

While the fact is that Form 16 is the prescribed form for issue of certificate of deduction of tax at source from an employee. Employer can decline to issue Form 16 in case there is no deduction of tax at source. It is clear from a bare reading of section 203 of the I T Act and the relevant rule 31 of IT Rule.

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