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Relaxation of TDS Deposit Rules For Employers from October 1, 2024: Will It Affect Employee TDS Credit?
Starting on October 1, 2024, businesses will have an extended period of time before receiving a notice of prosecution to deposit TDS and penal interest with the government.
TDS Deposit Rules Relaxed (Image Source: iStock)
The rules governing how businesses must deduct TDS from employee salaries have been relaxed by the government. These rules deal with the amount of time that companies or deductors have to deposit TDS (taxes deducted from their payments) with the government before the prosecution notice being received. The seventh day of the month after the month in which TDS is deducted is often the deadline for submitting the required paperwork to the government.
Employees might be concerned that the companies' relaxation of TDS compliance requirements will affect their ability to deposit taxes on time against their individual PANs. There have been instances recently where businesses like SpiceJet and Byju's failed to timely deposit TDS with the government, resulting in income tax issues for their employees.
The companies were previously given sixty days from the initial deadline to deposit the pending TDS (tax deducted at source). However, the new income tax laws provide companies an extension to accomplish this as of October 1, 2024. Companies can deposit TDS with the government starting on October 1 and up to the deadline for filing the TDS return. Penal interest would need to be paid in addition if the TDS is deposited after the first due date. This means that the TDS deposit must be made within an extra 20 days, or 60 days from the original due date plus an extra 20 days.
As per the previous laws, if a company doesn't deposit the tax deducted by July 7 (60 days from the due date of May 7), they will recienve a notice from the income tax department asking the reason for not being prosecuted. Under the new TDS laws, if the company doesn't deposit the TDS, along with the penal interest by July 31 (deadline for TDS return filing), then the income tax department will send a prosecution notice to the firm.
According to the income tax laws, the tax deductor needs to deposit the TDS dues on or before the seventh of the next month except in April. The March TDS is deposited on or before April 7 while others have to deposit on April 30.
Companies will get additional time to deposit the TDS with the government with the introduction of the new TDS laws.
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Permeit Kaur author
Permeit Kaur holds a degree in Journalism and Mass Communication from Delhi Metropolitan Education (IP University). With a passion for storytelling, s...View More
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