Manohar Lal (Senior Manager) 04 September 2014

Tds

Dear Sir,

I want to know if the accurate TDS has been deducted from the salary of an employee and for the year he has been given Form16 by the employer but while submitting the Form 24 by employer, there is some mistake. Now the employee has received a notice from Income Tax Authorities to deposit u/s 220(2) the tax while his tax has been deducted by the employer. What will be the course of action by employee 1. He should deposit the amount demanded by Income Tax Authorities and after that should approach his employer to submit revised return and claim refund from employer.

2. Or whether he may approach income tax authorities submitting his Form 16 that accurate tax has been deducted from his salary.

please advise me which action is appropriate and lawfully permissible.

I shall be highly thankful.

Manohar Lal

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2 Replies

Kumar Doab (FIN) 04 September 2014

Submit a representation addressed to ITO and mark a copy of the company's official e.g. Finance Manager and if required MD,that has signed on Form16 with footnote to say Finance Manager to revert in writing.

Obtain acknowledgment from both.

Both shall tell you the remedy.

If the company has erred it should not hesitate to correct the error and deduct pending TDS and revised Form16.

PRAKRITI (TAX EXECUTIVE) 11 September 2014

Dear Manoharlal,

1. Firstly check the TDS credit available in your Form 26AS for the year for which you have received the notice from Income Tax Department. You can check your Form 26AS by logging on to the Income Tax Website. You may do this to cross check whether your employer has actually made a default in payment of TDS or not.

2. Further, you may reply the Income Tax Officer (ITO) stating that making of TDS is the liability of employer. In case of timely payment of TDS to the Government, the employer is liable for interest, penalty and also prosecution. In this matter kindly refer decision of high court of Mumbai in the case of taxpayer Yashpal Sahni versus assistant commissioner of Income Tax, where the court said that it was the employer’s responsibility to employees to deduct the applicable tax at source on their income at the applicable rates. Further, such taxes had to be paid to the credit of the central government within the prescribed time limit. In case the company defaulted on depositing the TDS collected, it shall be liable to pay interest at the prescribed rate on the tax amount. Also, the Act had enough provision to both punish the defaulter and recover the TDS from the person who had deducted it.

I hope the above information proves useful to you.