DIGITALLY SIGNED TDS CERTIFICATES

CBDT has issued Circular 2/2007 dated 21-05-2007,
allowing employers to issue digitally signed Form 16 to
employees.
Form 16 till now
Every employer has to issue TDS certificate in Form 16 to
employees before 30th April. The certificate has to be
singed by the authorised person.
The certificate, till assessment year 2006-07 was a
critical document in the hands of employee, as it needed
to be attached with the return of income. Without Form
16, the return of income was not accepted.
Annexure less filing for AY 2007-08
This has changed with the introduction of annexure less
returns for the assessment year 2007-2008. There is no
need to attach Form 16 with the return of income. In fact,
it has been made very clear that even if any attachment is
presented , the receiving person will detach the same and
return it to the assessee.
The TDS certificates are now issued only for the purpose
of personal record of the employees subject to the
condition that they may be required to produce the same
on demand before the Assessing Officer.
The TDS details made in the return of income can also
be matched with the e-TDS returns Form 24Q furnished
by the deductors.
Physically signing Form 16
Many companies have a very large number of employees.
This posed problem for the person authorised to issue
TDS certificate as he/she would have to physically sign
each and every certificate, which is very time consuming.
There were representation to the income tax department
to allow the employers to use their digital signatures to
authenticate TDS certificates instead of signing the
certificates manually.
Digital Signature
• Digital signatures are being used to authenticate
most of the e-commerce transactions on the internet.
Digital signature are used for e-filing of return of
income. All ROC returns are also electronically filed
with digital signatures.
Digitally Signed Form 16
• Deductors are now allowed to use their digital
signatures to authenticate the certificates of
deduction of tax at source in Form No.16.
• This is optional and they can continue to manually
sign the certificate.
• The deductors will have to ensure that TDS
certificates in Form No.16 bearing digital signatures
have a control No. and a log of such control number
must be maintained.
• The deductor must ensure that its TAN and the PAN of
the employee are correctly mentioned in such Form.
• The deductors will also ensure that once the
certificates are digitally signed, the contents of the
certificates are not amenable to change by anyone.
When and how to issue
For the financial year 2006-07 , the last date of issuing
Form 16 was April 30, 2007 . This would mean that all the
employers would have already issued Form 16 with
manual signature.
For the financial year 2007-2008, however digitally
signed certificates can be issued.
For issuing the same
• You will require a software tool to create Form 16 in
format which cannot be changed.
• You can also create Form 16 in Microsoft Word file
and digitally sign it. To do this :
1. On the Tools menu, click Options, and click
the Security tab.
2. Click Digital signatures.
3. Click Add.
4. Select the certificate you want to add, and
then click OK.