The Income-Tax Act casts responsibility on the employer for tax deduction at source (TDS) on Salary at the time of payment of salary to employees whose salary income is above the maximum amount not chargeable to tax. The employer is required to deduct TDS on salary at the average  rate of income-tax and deposit the same with the government within the prescribed time. The employer is also required to file withholding tax returns and issue TDS certificate to the employee.

Various penalties are levied on the employer in case of default, making the entire procedure equally painful for your employer.

So, you must have started realising that the grass on the other side is not as green as you thought. Though, from the above it is understood that TDS is solely the obligation of the employer but, if as an employee you are aware that there is a TDS default, then you may be held responsible too. If your total income exceeds the maximum amount not chargeable to tax and no TDS is being deducted by the employer, then you are under an obligation to pay tax through the advance tax route.TDS on Salary –Key Points every employee should know

You should estimate your total income for the year that could comprise of salary, house property, interest income etc. Relevant deductions applicable to each source of income, on account of eligible investments, interest on housing loans, etc, can be considered to calculate the taxable income. On this amount, you should calculate the tax payable as per the applicable tax rates.

Having arrived at the gross tax liability, reduce the amount of TDS suffered/ likely to be suffered on the above income. If the balance tax payable exceeds Rs 10,000, you will be required to comply with the advance tax provisions. The entire amount becomes payable as advance tax in four installments on or before June 15th, September 15th, December 15th and March 15th, during the financial year.In case you miss the advance tax installments, taxes can also be deposited by way of self-assessment tax post April 1 (after the end of financial year). In case the employer has defaulted in TDS, it would be your responsibility to deposit taxes by way of advance tax/ self-assessment tax as ultimately, taxes are to be deposited on your income.

Failure to deposit taxes could lead to concealment of income on your part, resulting in penalty to be paid by you equivalent to 100-300% of the tax amount not deposited.Further, there are interest implications as well , but there are judicial precedents which indicate that if taxes were required to be deposited by way of TDS and have not been done, the recipient of income is not required to pay interest.

Going forward, before you plan your month-end celebrations, just glance through your pay stub. Instead of creating a hue and cry over the tax figure, be thankful to your employer for taking care of your taxes and saving you from a lot of hassles.

(Republished With Amendments)

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106 responses to “TDS on salary: Employees responsibility if employer defaults”

  1. MR RG.JANTJIES says:

    I was in a situation where my employer deducted my tax with incorrect information based mostly with my dependants on my medical aid.They deducted basically less tax now they say that i have actually received the money.Even if i did receive it,it did not state on my salary advice that money is being paid back to me.After a long debate with them they eventually acknowledge their mistake and offered to pay the said amount and then i have to pay them back as in a loan.I am sole provider for my family and R15000.00 is a hell of a lot to just give away like that.Any advice from any legal practioner.They dont even opt to partially pay the debt the put me in now.Please email me with advice

  2. Bharathi says:

    My daughter worked with kingfisher Airlines, they deducted TDS, but didn’t deposited tax to income tax Department, didn’t issue TDS certificate, on salary slip it shows tax deducted, now income tax Department sent notice to pay the tax again. The tax was collected by kingfisher airline because income tax Department authoriised kingfisher Airlines to collect and asked them to deposit, it is the income tax Departments responseibilty to collect money from kingfisher Airlines because they only authorised to deduct TDS , why they didn’t take bank guaranty when allowing someone to collect money on behalf of income tax Department . Once we paid TDS and because of the inability to collect money from kingfisher Airlines when it was existing, when it was functioning, is it correct to to pay TDS amount again with interest which was already paid. If income tax Department is failed to collect TDS from his authorised person it is the fault of income tax Department and not the worker who paid TDS to the income tax Department authorised person. It’s not at all correct to penalise a common man for mistake of the department, please help me the correct method not to pay again the TDS amount with interest, thanks

  3. Vijay Kumar Dadoo says:

    TDS and TCS Return Late filing attracts penalty of Rs. 200/- per day. It is certainly a negative way of working. So also the late filing of Income Tax Return effective AY 2018-19, attracting minimum Rs. 5000/- penalty, is again a negative working.

  4. Kitab Singh Nimbrayan says:

    Sir, I am an employee of Haryana Govt. I want to ask that my TDS was not deducted by the DDO and issued me Form No. 16 during last month. I got the form 16 and found that my Income Tax Rs. 4000/- not deducted from my salary which was already intimated to the office that the balance Tax may kindly be deducted from my salary. But with the irresponsibility tax was not deducted. It is requested that I am responsible or my employer in this case

  5. KASHI NATH MISHRA says:

    As far as it relates to the reflecting of salary paid in form 26 AS for first half year, there was no requirement as such in the law at that time also but the company voluntary files the TDS return of employees in the case of no TDS also.

  6. Param says:

    My employer is deducting tax from my salary every month. He has deducted foe eleven months and not deducted for last month. Now i have to deduct my last month salary tax and tax for other interest income. Sir i want to know how can I deduct my remaining tax.

  7. Sachin Patil says:

    Sir, my employer deducted amount but not credited to tax department, and issues a form 16 with deducted mode, and I am did the tax return with the help of form 16. But deducted amount not credited to income tax department. Please solve the problem

  8. Amar Deep says:

    Sir my employer deducted my TDS and deposited to IT department but he don’t upload the same on Traces site and didn’t provide the form 16 which was downloaded from site. when we efilled our ITR then we face the problem that our income tax was not uploaded and IT department send us demand notice. after a number of request the employer don’t solve the problem yet and it makes us defaulter. please give us suggestion to resolve this problem

    • sanjib says:

      my income tax from salary has been deducted by my Office but the same mount hasnotbeen uploaded e portal of my PAN Account. As a result I am unable to upload my retunr. Please advice how I file my return as my DDO is not bothering for the same

  9. e ravi kiran says:

    i have worked for an realty organisation wherein they have deducted my TDS and given my salary deducting the same.
    Now when i ask for the form 16 they say they will give , but actually they haven’t paid any taxes to the government .

    Now what should i do kindly assist sir

  10. Dr. Somen Chanda says:

    Sir, as the Principal of a govt. aided college I could not deduct IT on 31st of March 2017 on which day my employees received a salary arrear directly in their a/c from govt. As we calculate the final IT on 28th Feb (FY: Mar-Feb) and the salary of March is done on 1st week of April, the said arrear has come as ‘extra salary’ in March. Therefore we are stuck. Now my query is how to do the TDS on this arrear and submit the same to the govt.

  11. SATHISH KUMAR says:

    Sir, I am working in a private company. During the last year 2015-16, my company had deducted some amount as TDS from my salary and remitted to Govt. But, due to some internal problems in the company, I myself paid balance taxes directly as self assessment tax. Is it allowed ?. Please clarify.

  12. BANA says:

    i earn 278000 yearly i am liable for tds or not because as per IT act am not liable to pay tax because i get 87A deduction but my question only that tds is deducted by co. or not

    • SATHISH KUMAR says:

      Sir,
      I had gifted my father a cheque for Rs.25.00 lakh. He started an FD with the amount, making me as 2nd joint holder with my signature. But, the interest goes to his personal SB account monthly. Will it attract any tax liability to me. ?.

  13. Abhishek Verma says:

    Dear sir,

    What if my employer has deducted TDS for FY 2015-16 but deposited only 10 months the balance 2 months TDS he will deposit in next Quarter i.e. till May-16 and I have filed my return in March-16 will I get the refund of balance 2 months TDS which my employer will submitt in May-16 ?

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