Live Course on Drafting of Appeal and Reply of Penalty Notice by CA Sachin Sinha. Register Now!!

Form 16

Shivani (Learner) (1881 Points)

27 July 2016

Dear friends

an employee salary is 300000 per annum,

no tds was deductible on his salary.

now is it compulsory for employer to issue form 16.

form 16 is a tds certificate.

when tds is not deducted is it still mandatory for employer to issue form 16 to employee

shivani

Reply
Follow
Share

9 Replies

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 27 July 2016

Employer can decline to issue Form 16 in case there is no deduction of tax at source.It is clear from a bare reading of section 203 of the I T Act and the relevant rule 31 of IT Rule .

Liability to give a certificate of tax deduction is given in Section 203 of the I T Act .For employer, specific provision is given in sub-section 2 of section 203 of the I T Act.

CA Harshal Totla (Chartered Accountant) (2229 Points)
Replied 27 July 2016

If no tds is made, emoloyer can refuse to issue Form 16

Shivani (Learner) (1881 Points)
Replied 28 July 2016

but if employer is handing over salary in cash to employee.

then what proof does employee have to support the income under the head Salary in his ITR if employer refuses to issue Form 16

shivani

CA Harshal Totla (Chartered Accountant) (2229 Points)
Replied 28 July 2016

Since, employer is paying him salary in cash, company must be passing entry for salary paid to this employee on monthly basis.So, employee can obtain a summary statement of entries passed every month relating to his salary. For example, if company is using tally software for passing entries, then open that employee's account, enter period 01.04.2015 to 31.03.2016 then all salary payments made to him during this period will get displayed. Take a print out of this with full narration option. Get it signed and sealed by the person who approves these payments in the company. Your proof is ready.
By the way, you don't need to do all these as ITD is very less likely to issue a scrutiny notice in such low income cases. Just fill ITR-1, show income of Rs.3Lakh under Income from salary (i am assuming that he is having salary income only)and proceed paying taxes if any and your return will get processed for sure. If receive a notice in future, then obtain evidence as mentioned above.

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 28 July 2016

Section 40A(3)(a) of the Income-tax Act, 1961 provides that any expenditure incurred in respect of which payment is made in a sum exceeding Rs.20,000/- otherwise than by an account payee cheque drawn on a bank or by an account payee bank draft, shall not be allowed as a deduction.

Salary covered under above section. So salary cannot be paid in cash above Rs 20000/-.

Amit S Bhatia (Student) (29 Points)
Replied 28 July 2016

If tds is not deducted from employee salary then employor can refuse to give form 16 and emloyee can ask for salary certificate from employer on the letter head of employer and from that certificate employee can file return.

Balram Choudhary (Sr. Accountant) (112 Points)
Replied 28 July 2016

SALARY CAN BE PAID IN CASH MORE THAN RS.20000/- IN TWO DIFFRENT DATE

LIKE RS.5000/- AS ADVANCE ON ANY DATE BEFORE SALARY DATE AND

OTHER IN SALARY DATE

Balram Choudhary (Sr. Accountant) (112 Points)
Replied 28 July 2016

keep cash payment voucher or ledger copy ralated to period as proof to support the income under the head Salary in his ITR if employer refuses to issue Form 16