Salary certificate
This query is : Resolved
29 May 2009
Dear All,
Can a company issue a salary certificate with tax remaining payable? Are there any consequences if issued?
Can a company issue a salary certificate with tax remaining payable? Are there any consequences if issued?
30 May 2009
There is no bar in doing so.
Non deduction and payment of salary TDS on time will attract its own consequences as provided in the IT Act, like disallowance, interest, penalty, etc.
Non deduction and payment of salary TDS on time will attract its own consequences as provided in the IT Act, like disallowance, interest, penalty, etc.
30 May 2009
It is a newly incorporated company and voluntary PF was applied for all the employees. TDS was deducted and paid (Quarterly returns also filed) after giving 80C deductions for the employees. But due to some problems, the PF dept refused to give voluntary PF to the company and so the PF amount which was deducted earlier was refunded to the employees hence increasing thier taxable income. As the department refused near the end of the year(31st march), the balance tax could not be deducted hence resulting in tax payable for the employee.
In this case "Can a company issue a salary certificate with tax remaining payable? Are there any consequences if issued?"
In this case "Can a company issue a salary certificate with tax remaining payable? Are there any consequences if issued?"
22 July 2025
Yes, a company can issue a salary certificate showing tax remaining payable, especially in situations like the one you described where PF contributions were refunded late, causing tax adjustments after the TDS return filing.
Key points to consider:
Legality:
There is no prohibition under the Income Tax Act on issuing a salary certificate that shows tax payable by the employee. The certificate reflects the actual facts.
Consequences:
The company must have deducted and deposited TDS as per actual liability at the time of payment or deduction.
If tax is short deducted or not deducted, the company may be liable for interest and penalties under sections 201(1A), 234B, and 234C of the IT Act.
Employee needs to pay the remaining tax either via self-assessment or during filing income tax returns.
Practical Scenario in your case:
Since PF deductions were reversed after the end of the financial year, the taxable income increased, which was not reflected in TDS during the year. Hence, the employee has tax payable.
The company can issue the salary certificate showing actual tax deducted and tax payable, so employee can pay balance tax accordingly.
Summary:
Issuing a salary certificate showing tax payable is acceptable and correct. The company should ensure TDS compliance during the year, but adjustments after year-end (like PF refunds) can cause such tax dues. Employees must clear these dues when filing their tax returns.
Key points to consider:
Legality:
There is no prohibition under the Income Tax Act on issuing a salary certificate that shows tax payable by the employee. The certificate reflects the actual facts.
Consequences:
The company must have deducted and deposited TDS as per actual liability at the time of payment or deduction.
If tax is short deducted or not deducted, the company may be liable for interest and penalties under sections 201(1A), 234B, and 234C of the IT Act.
Employee needs to pay the remaining tax either via self-assessment or during filing income tax returns.
Practical Scenario in your case:
Since PF deductions were reversed after the end of the financial year, the taxable income increased, which was not reflected in TDS during the year. Hence, the employee has tax payable.
The company can issue the salary certificate showing actual tax deducted and tax payable, so employee can pay balance tax accordingly.
Summary:
Issuing a salary certificate showing tax payable is acceptable and correct. The company should ensure TDS compliance during the year, but adjustments after year-end (like PF refunds) can cause such tax dues. Employees must clear these dues when filing their tax returns.
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