Liability of TDS when employees disappears

This query is : Resolved

GOURAV JAIN (Querist)
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06 May 2008 Hello friends,
We have a query regarding deduction of tax from salary, when the employee disappears without giving notice of resignation. The query in detail is as follows:
An employee has given declaration at the beginning of the financial year regarding his investment to be made and rent to be paid during that financial year. As per the declaration given by the employee, the tax is deducted regularly on monthly basis. After some months (or say 4 months), the employee disappears (leaves) from the company without giving any notice of resignation. The salary for whole of the 4 months has already been paid to the employee.
But the employee did not show any evidence / documents for investment made / rent paid till that period. Later on when the income and tax liability thereon is computed, then also there is a liability of deduction of tax from the salary of last 4 months paid. But this tax was not deducted or deposited with the account of Central Government due to declaration submitted by the employee.
a) What will be the liability on employer regarding deposit of tax on salary? What remedy is available to the employer on liability of deduction and deposit of tax due to negligence on the part of the employee?
b) If the salary for the last month is left, but the tax liability comes to be in excess of the payment required to be made to the employee, then what treatment will be done?
Please guide us on the above mentioned issues.

Waiting for your prompt response,

With Regards,

Gourav Jain CA

pushpendra

pushpendra (Expert)
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06 May 2008 In this case it will be neglegency of the employer and liablility will be on employer and he has to deposit the tax , if cann't recover from the employee.

Pushpendra
9414072365

GOURAV JAIN

GOURAV JAIN (Querist)
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07 May 2008 How it can be said that it is neglegency on part of employer. Employer has to deduct the TDs on the basis of Declaration submitted by the employee

R.V.RAO

R.V.RAO (Expert)
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07 May 2008 AFTER ADJUSTING THE UNPAID LAST MONTH SALARY OF EMPLOYEE IF ANY AGAINST TDS ,THE COMPANY, HAS TO DEPOSIT BALANCE TDS PAYABLE IF ANY OUT OF ITS OWN RESOURCES.
ALTERNATIVELY,IF THE EMPLOYEE HAS NOT SERVED THE FULL 12 MONTHS IN THE FIN. YEAR,THE TAX LIABILITY FOR SAY 9 OR 10 MONTHS OF ACTUAL EMPLOYMENT WILL ALSO BE LESS.
SOME COMPANIES IN SUCH CASE SHOW AS IF THE EMPLOYEE WORKED FOR LESSER NUMBER OF MONTHS AND ADJUST UNPAID SALARY AND SHOW AS IF THE UNPAID SALARY IS EQUAL TO HIS TDS LIABILITY,THEREBY ARRIVING AT NIL TDS LIABILITY ON ACCOUNT OF THE EMPLOYEE.
BUT ATTENDANCE AND TRAVEL / CONVEYANCE BILLS ETC... SHOULD NOT PROVE THE CONTRARY.
R.V.RAO

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