Form 16-Consideration of savings period

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CPA Partha Sengupta (Querist)

17 January 2009 Hi all,

Kindly resolve the following query:

The date of retirement in case of an employee is 17th Oct'2008.

Now, upto what period income & savings is to be taken into consideration by the employer while generating Form 16?

Here, the ivestment/savings month of the employee is Dec'08. Should it be taken into consideration or not by the employer while generating Form 16 for the period 01.04.08 to 17.010.08?

Thanks in advance.

K V Subba Rao

K V Subba Rao (Expert)

17 January 2009 (1) Employer is bound to take both income and savings in approved media actually affected upto 17th Oct 08

(2) There is no compulsion that Employer should issue Form-16 immediately after retirement. Issuance can be delayed.

(3)Subsequently, during 18th Oct 08 to 31st Mar 09, if Employee invests any amounts in approved media and produces evidence to the satisfaction of Employer, the Employer may include these amounts also and issue Form-16.

(4) In all such cases, for practical reasons, Employer is advised, at the time of settlement, to affect TDS taking into consideration savings actually made upto 17th Oct 08 only and then settle the Employee's account on retirement.

(5) If Employee desires to make savings after retirement, let him do so and claim Refund.

(6) Alternatively, based on Employee's request, Employer may work out the tax amount attributable to "promised" savings and withhold from payment at the time of settlement on retirement.

(7) Later, when Employee produces evidence about savings, Employer may release withheld amount

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

18 January 2009 There is no employer employee relation ship after 17/10/2008. Therefore,the employer is bound to consider investment of the employee up to 17/10/2008 only for the purpose of Form -16.

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