BYJU’S Salaries, Unpaid TDS, and Section 205: An In-Depth Analysis

Dear Friends,

All of us are busy filing Income Tax Returns, and the Income Tax Department reports receiving 13 lakh returns daily, with a total of 2.70 crore returns received as of 14-07-2024.

Although we face delays in downloading 26AS, AIS/TIS, and making e-payments of taxes, we compete with others to file ITRs due to peer comparison and steep penalties compared to tax paid. Penalties often exceed CA fees in the majority of cases filed before July. Last year, 6.91 crore ITRs were filed by 31-07-2023. Now, within the next 17 days, we need to file at least 24.76 lakh ITRs to match last year’s tally.

The purpose of this letter is to address a specific issue.

According to news articles in various newspapers, Byju’s has reportedly not remitted TDS since July 2023. Recently, NCLT admitted a Corporate Insolvency Resolution Process (CIRP) petition filed by BCCI against Byju’s.

As per section 205, there is a bar against direct demand on the assessee where tax is deductible at source under the foregoing provisions of this chapter. The assessee shall not be called upon to pay the tax himself to the extent to which tax has been deducted from that income.

In numerous cases, Tribunals and High Courts have ruled that when tax has been deducted from salary or other income, it cannot be demanded again.

1. 2023(1) TMI 964- ITAT Pune – Chandrashekhar Sadashiv Potphode vs Deputy Commissioner of Income Tax CPC, Bengaluru
2. 2007(7) TMI 7- Yashpal Sahni vs Union of India
3. 2021(5) TMI 37- Ashok Kumar B. Chowatia, P. Narayanan vs The Joint Commissioner of Income Tax (TDS) etc.,

Now, the practical question arises: should you declare the salary in ITR?

1. If you declare it, you may have to pay tax again.
2. If you only fill in Byju’s TAN and claim the TDS credit, a demand with interest may be raised immediately.
3. If you do not declare the salary and file the return, it may later be treated as income escaping assessment.

If Byju’s does not file TDS returns, no notices for demand will be generated. However, if Byju’s files after a few months of delay, you will have to file a 154 for claiming credit for the TDS.

Byju’s had 25.86 thousand employees in March 2023 and 24.78 thousand in May 2023.

So, what should you do?

Tax cannot be demanded twice; hence, credit must be given for tax deducted by Byju’s on behalf of the Government of India. However, there is no provision in the ITR for a situation like this. Section 205 has not been integrated into ITR Forms. Now, 25 thousand assesses are to undergo this ordeal, and we, the Chartered Accountants handling their cases, should suffer.

Therefore, we shall request CPC to process ITRs containing Byju’s TAN without demand, or alternatively, the Income Tax Department may issue a Circular to allow credit for such cases, which would be unprecedented in Indian history.

We may also collect salary slips from these employees showing deductions for our records and future appeals.

CA V. Alagappan FCA, LLB