TDS deposit rules for employers relaxed from Oct 1, 2024: Does this put employee's TDS credit at risk?
Employees may be worried that the relaxation in TDS compliance given to companies might impact the timely deposit of the tax against their respective PANs. Recently, there have been cases of companies such as SpiceJet and Byju's failing to deposit TDS with the government in time leading to employees facing income tax problems.
Earlier, the companies had 60 days from the original due date to deposit the pending TDS (tax deducted at source). But from October 1, 2024, the new income tax laws give companies more time to do this. From October 1 onwards, companies can deposit TDS with the government till the deadline to file the TDS return. However, if the TDS is deposited after the original due date then, penal interest would have to be additionally paid. This means an additional 20 days to make the TDS deposit i.e., 60 days from original due date plus 20 more days.
The income tax department will now send a prosecution notice to the company if the TDS is not deposited by the due date for filing the TDS return. Earlier, a prosecution notice would be sent after the expiry of the 60 days from the due date for depositing the TDS. The notice will be sent if the TDS amount exceeds Rs 25 lakh.
Here is an example to understand this: Your company deducted tax from your April salary. According to the income tax laws, the last date to deposit the tax deducted in April is the 7th of the following month which is May 7 in this case. The last date to file the TDS return for the tax deducted in April, May and June is July 31.
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