LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

Issue of form 16 against cash salary

karthikeya (Accountant) (24 Points)

07 October 2015

Hi Everyone.,

Recently i got the JOB in MNC, They have been Asking for Form16. But I am getting my salary through cash not in bank or cheque. the company has clearly stated in the appointment letter that "due of tax related issues we are not debiting the salaries", What should i do ?

Reply
Follow
Share

3 Replies

Miss Rinkal (Student) (1304 Points)
Replied 07 October 2015

The statements that you have made are not clear.

Is this what you mean to say that

MNC is asking for FORM 16.
You have done a job previously in a company wherein salary was remitted in form of cash. And in their appointment letter, they had mentioned "due of tax related issues we are not debiting the salaries".

Now if what I stated is correct, then clarification is required as to:

Were your previous salary subjected to tds?I.e has tax deducted been deducted. For this you can check form 26AS. or check whether have you earned salary more 2.5 lacs from that company in the financial year 2014-15. Form 16 is merely a certificate issued by an employer to all his employees for a particular financial year at the end of the said year reflecting the total salary paid and amount of tax deducted (‘TDS’) during the year. TDS certificate in Form 16 is only required to be issued to the employee when TDS has been deducted. In case no TDS has been deducted by the employer he may not issue you a Form 16.

From the company's statement made in the appointment letter, 2 views can be made:

Either company's policy is to issue form16 only to those who are subjected to TDs. Or
Company is making salary payments in cash to hide tax.

Now to resolve the issue of Form 16 to be given to MNC is concerned, you can tell them that you don't have Form 16 or all you can do is you can give them salary certificate signed from your previous employer on their letter head.

The possible reason for MNC to ask for Form 16 is either they want to know your previous salary or they want for income tax purpose. I.e deduct tds for the remaining period if income from salary exceeds basic exemption limit of 2.5 lacs

Bee Bee (Executive) (23 Points)
Replied 13 June 2016

Hi Friends,

I've a scenario here. my friend received the salary in cash from April 2012 - Aug 2013 [ April 2012 - May 2013 is below 20,000. But June and July it is 23,000] and he has relieved from the company by July 2013. Will it be accepted? or Will there be any problem? If so what will be the problem? (for the employee or employer). Now he has got a form - 16 (not e-filed; manual entry since it comes NIL return ) for the same.

Kindly help