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FORM 16

Abansal ( Manager) (121 Points)

06 February 2010

HI,

I AM CALCULATING THE TDS LIAB OF EMPLOYEES ON THERE SALARIES FOR THE YEAR, BUT 1 PROBLEM I AM FACING that AN EMPLOYEE LIAB ON HIS SAL FOR THE YEAR IS COMMING Rs 2340/-, but the employee is saying that his TDS deducted on interest income is already 3500/-, which acc to his consolidatd position shows no tax liab pending.

he has said not to deduct TDS on sal.

now my question is, how to give FORM 16 at the end of the year which shows TDS liab on the company part Rs 2340-, although the tds IS DEDUCTED, there is no liab for the employee, but i can not show his tds deducted by bank and also can not issue form with tds liab pending on comp part, what to do now?

kindly advise?

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14 Replies

CA. Rajesh P. Ahir (In Service @ PSU) (687 Points)
Replied 06 February 2010

TDSis Liability of an EMPLOYER and not of an Employee.

You has to Deduct Tax from the salary of employee. TDS deducted by Bank is of income other than salary. So you should deduct TDS from Salary income. Further he will get the refund of Excess TDS.

1 Like

Amir (Learner) (4016 Points)
Replied 06 February 2010

Dear Aashima,

Rule 26 provides a declaration form to be submitted by employee to his employer in such situations & based on such declaration u can procced by not deducting TDS

CA. Rajesh P. Ahir (In Service @ PSU) (687 Points)
Replied 06 February 2010

I fully agree with AMIR..

But AMIR, Will salary Expense without TDS, be allowed as deduction in IT Act to the company ?

Amir (Learner) (4016 Points)
Replied 06 February 2010

Dear Rajesh,

First of all sec 40(a) doesnot covers cases where salary is paid to residents in India..

Further, These two provision are not conflicting, this rule can be understood as an exception to the general principle where expenses are allowed even in case of non deduction of TDS

CA RITESH JUNEJA (CA, DISA,B COM) (151 Points)
Replied 06 February 2010

FULLY AGREE WITH MR AMIR. MAY I KNOW YOUR ACTUAL NAME MR AMIR ?

Abansal ( Manager) (121 Points)
Replied 06 February 2010

well well well,

thanks to all those who have replied my querry, but i think so as per Sec 192 ( 2B) , it says

"2B) Where an assessee who receives any income chargeable under the head "Salaries" has, in addition, any income chargeable under any other head of income (not being a loss under any such head other than the loss under the head "income from house property") for the same financial year, he may send to the person responsible for making the payment referred to in sub-section (1) or particulars of - (a) Such other income and of any tax deducted thereon under any other provision of this Chapter;

(b) The loss, if any, under the head "Income from house property," in such form and verified in such manner as may be prescribed, and thereupon the person responsible as aforesaid shall take -

(i) Such other income and tax, if any, deducted thereon; and

(ii) The loss, if any, under the head "Income from house property", also into account for the purposes of making the deduction under sub-section (1) :

Provided that this sub-section shall not in any case have the effect of reducing the tax deductible except where the loss under the head "Income from house property" has been taken into account, from income under the head "Salaries" below the amount that would be so deductible if the other income and the tax deducted thereon had not been taken into account.

so i think so , TDS deducted by bank can not be taken into account. company is liable for full tds

this liab can be incresed by other income but can not be reduced by other's deducting TDS on that income.

Thank to Rajesh, Amir and Ritesh

CA RITESH JUNEJA (CA, DISA,B COM) (151 Points)
Replied 06 February 2010

dear aashima
The basic purpose of TDS provisions is that govt gets the due income tax of a person on his total income.If an employee provides enough documentary support (like bank certificate that so much of tds will be deducted) or the employee takes responsilbily on his shoulders by giving declaration to company that his full tax liability will get discharged by other ways, then the employer can rely upon it and do not deduct TDS. for example while calculating TDS deductible the employer takes into consideration the 80C savings by employee on the basis of his documentary proof,similarly tds claim on other basis is also considerable for not deducting TDS or lesser deduction.

Amir (Learner) (4016 Points)
Replied 06 February 2010

Dear Aashima,

Ya I also thought about this Proviso, but the next thing which came to my mind is exactly what friend Ritesh has mentioned..

The better thing would be to tell the employee to get a certificate of No deduction from AO u/s 197

Kashyap Joshi (Proprietor ) (260 Points)
Replied 06 February 2010

Agree with Mr. Ritesh and Mr. Amir

Alok Bansod (Accounts executiv) (135 Points)
Replied 07 February 2010

If employee furnishes his other sources of income and other thing, and on final calculation if no tax is deductable, company should not deduct the same.

Abansal ( Manager) (121 Points)
Replied 08 February 2010

thanks!

but can i issue form 16, which shows TDS liab pending on the part of company?

will it be a valid form 16

Amir (Learner) (4016 Points)
Replied 08 February 2010

Dear Aashima,

Issuing Form 16 which shows tax payable will attract interest/penalities under the Act.

You had rightly mentioned on that day, the proviso to the section restrict us to do that, therefore as I suggested on that day better option would be to tell the employee to get a copy of no deduction Certificate u/s 197 from his AO, otherwise his TDS should be deducted...