Query - tds on salary and penalty for non payment of adv.tax

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Anil (Querist)
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03 July 2012 Is penlty leviable on SALARIED person for non payment of advance tax in time as per slabs prescribed?

(Normally TDS is deducted by company evenly throught the year. But due to oversight / negligence company may deduct the whole of TDS amount out of employee's salary during the month of March and remitt it to Department. Hence this question.)

Kindly quote section / rules whenever possible.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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03 July 2012 If the whole amount of tax has been deducted by way of TDS, NO interest shall be levied on the employee, even though TDS may have been deducted in the month of March.

Rajesh

Rajesh (Expert)
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03 July 2012 Section 234B the tax has to be reduced by the amount of TDS for the purpose of calculation of interest. The only issue here is that TDS has to deducted as per the provisions of Chapter XVII. But normally there is no problem of penalty on salaried class. The employee cannot be held liable for the default committed by the employer.

Anil

Anil (Querist)
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03 July 2012 Dear Siddartha Sir and Rajesh Sir,

I thank you both. Would it be possible for any of you to quote relevant section of Income Tax which says penalty on salaried employee cannot be levied in above mentioned case?

In above case, assuming total TDS is deducted in march and paid to department, is any penalty leviable on the company? If yes, which section of IT Act deals with the same.

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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19 July 2025 Query 1: Is penalty/interest levied on a salaried employee if TDS is deducted only in March (instead of evenly through the year)?

🔹 Answer: NO penalty is levied on the salaried employee, provided the TDS is deducted and deposited in full before 31st March.
🔍 Relevant Explanation:
As per Section 208 of the Income Tax Act, a person is liable to pay advance tax if their tax liability (after TDS) exceeds ₹10,000.
However, in the case of salary income, TDS under Section 192 is considered sufficient compliance.
📘 CBDT Circular No. 8/2010, dated 13.12.2010, explicitly clarifies:

"Since the entire tax liability of a salaried person is normally discharged by the employer through TDS, the provisions of advance tax are not applicable."
Hence, even if TDS is deducted only in March, the employee is not penalized, as long as the full TDS is deducted and deposited by 31st March.

✅ No interest under Sections 234B or 234C will be charged to the employee in this case, since TDS was ultimately done and paid.

❌ Query 2: Can penalty be levied on the employer for deducting TDS only in March?

🔹 Answer: Yes, interest and/or penalty can be levied on the employer in such cases.
⚖️ Relevant Provisions:
Section 192: Requires employer to deduct TDS at the time of payment of salary, every month.
Section 201(1A):
Interest @ 1% per month (or part thereof) for late deduction of TDS.
Interest @ 1.5% per month (or part thereof) for late payment after deduction.
Section 271C: Penalty equal to the amount of TDS not deducted or paid (levied only by AO after hearing).
📌 Example Scenario:
Company deducted entire TDS in March instead of spreading across the year.
TDS was not deducted in April–Feb — violation of Sec. 192.
Interest under Section 201(1A) will apply from when TDS was required to be deducted (monthly salary payments) till actual deduction.

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