Tds from Salary on self declaration
This query is : Resolved
07 March 2011
Hello,
Experts
Please help me urgently
My query is
In case of salaried employee, employees make self declaration of investment considering which company deduct the TDS now my question is whether self declaration made and investment shown there in is compulsorily required to be check by employer (if yes then pls. give related section, case study if any)
Is it not enough that company takes the self declaration from employee and based on it deduct/not to deduct TDS. Whether proof of investment is compulsorily required to be submitted by employee.
Whether by self declaration it self employee not made liable for what ever declaration made by them.
Please reply in urgent and if any decision on same then quote the same
Thanks in advance
Experts
Please help me urgently
My query is
In case of salaried employee, employees make self declaration of investment considering which company deduct the TDS now my question is whether self declaration made and investment shown there in is compulsorily required to be check by employer (if yes then pls. give related section, case study if any)
Is it not enough that company takes the self declaration from employee and based on it deduct/not to deduct TDS. Whether proof of investment is compulsorily required to be submitted by employee.
Whether by self declaration it self employee not made liable for what ever declaration made by them.
Please reply in urgent and if any decision on same then quote the same
Thanks in advance
07 March 2011
The employer has to satisfy himself first with the self declaration made by the employee.
For that up to some extent he may rely upon the declaration submitted by employee at the beginning of FY in respect to tax savings investments, but simultaneously , it's onus of the employer to get corroborative evidence as regards to these investments at the year end or during any time in the last quarter of the previous year.
In case such proofs are not submitted by the employee he should deduct the TDS , if any short deduction has been made.
In nutshell, employer should not take the declarations as granted. He has to work on these.
For that up to some extent he may rely upon the declaration submitted by employee at the beginning of FY in respect to tax savings investments, but simultaneously , it's onus of the employer to get corroborative evidence as regards to these investments at the year end or during any time in the last quarter of the previous year.
In case such proofs are not submitted by the employee he should deduct the TDS , if any short deduction has been made.
In nutshell, employer should not take the declarations as granted. He has to work on these.
07 March 2011
Thank you sir.
But i want to know exactly whats the Act says about this. By employee's self declaration whether employers liability not ends? Is it compulsory to collect and check proof of investment of each and every employee?
Please provide if any judgment on relevant matters.
Thanks for reply.
Awaiting for your precious words
But i want to know exactly whats the Act says about this. By employee's self declaration whether employers liability not ends? Is it compulsory to collect and check proof of investment of each and every employee?
Please provide if any judgment on relevant matters.
Thanks for reply.
Awaiting for your precious words
27 July 2025
Great question! Here’s a detailed explanation regarding **TDS deduction on salary based on employee self-declaration of investments**:
---
### What does the Income Tax Act say?
* **Section 192** of the Income Tax Act governs TDS on salary.
* As per **Section 192(2A)** (introduced by the Finance Act 2015), an employee is required to submit a declaration of his investments to the employer to claim exemption under Chapter VI-A (like 80C, 80D, etc.).
* **However, the Act does NOT say that the employer’s liability ends just by accepting the self-declaration without verification.**
---
### Employer’s Responsibility
* The employer is **required to verify the proof of investments/claims** submitted by the employee (e.g., LIC receipts, PPF deposits, tuition fees receipts).
* Without such evidence, the employer is **mandated to deduct TDS on the higher estimated taxable salary** (i.e., without exemptions).
* This is because the employer is liable for correct deduction of tax and can be held responsible for any shortfall.
---
### Practical Compliance & Circulars
* The CBDT has issued circulars emphasizing that:
* Employers should collect **proofs of investments** from employees during the financial year or at least before the last quarter.
* Mere submission of self-declaration is **not sufficient**; employer must verify documents to avoid short deduction.
---
### Case Laws & Judgments
* While there is no specific Supreme Court ruling on this particular issue, the general principle upheld in tax matters is:
* **Employers are required to act prudently** and ensure that TDS is correctly deducted.
* Accepting a mere declaration without checking may expose the employer to penalties for short deduction.
---
### Summary
| **Aspect** | **Position** |
| ------------------------- | --------------------------------------------------------------- |
| Employee self-declaration | Required for claiming exemption but not conclusive evidence |
| Employer verification | Employer must verify investment proofs or else deduct TDS fully |
| Liability on employer | Employer liable for short deduction if verification not done |
| TDS deduction | Based on actual investments verified, else on higher income |
---
### Recommendations
* Collect **self-declaration early** in the year (e.g., April).
* Request **proof of investments before January (start of last quarter)**.
* If proof not submitted, **deduct TDS without exemptions**.
* Maintain proper records of declarations and proofs.
---
If you want, I can help draft a **proof collection format or reminder letter** to employees for submitting investment proofs on time.
---
---
### What does the Income Tax Act say?
* **Section 192** of the Income Tax Act governs TDS on salary.
* As per **Section 192(2A)** (introduced by the Finance Act 2015), an employee is required to submit a declaration of his investments to the employer to claim exemption under Chapter VI-A (like 80C, 80D, etc.).
* **However, the Act does NOT say that the employer’s liability ends just by accepting the self-declaration without verification.**
---
### Employer’s Responsibility
* The employer is **required to verify the proof of investments/claims** submitted by the employee (e.g., LIC receipts, PPF deposits, tuition fees receipts).
* Without such evidence, the employer is **mandated to deduct TDS on the higher estimated taxable salary** (i.e., without exemptions).
* This is because the employer is liable for correct deduction of tax and can be held responsible for any shortfall.
---
### Practical Compliance & Circulars
* The CBDT has issued circulars emphasizing that:
* Employers should collect **proofs of investments** from employees during the financial year or at least before the last quarter.
* Mere submission of self-declaration is **not sufficient**; employer must verify documents to avoid short deduction.
---
### Case Laws & Judgments
* While there is no specific Supreme Court ruling on this particular issue, the general principle upheld in tax matters is:
* **Employers are required to act prudently** and ensure that TDS is correctly deducted.
* Accepting a mere declaration without checking may expose the employer to penalties for short deduction.
---
### Summary
| **Aspect** | **Position** |
| ------------------------- | --------------------------------------------------------------- |
| Employee self-declaration | Required for claiming exemption but not conclusive evidence |
| Employer verification | Employer must verify investment proofs or else deduct TDS fully |
| Liability on employer | Employer liable for short deduction if verification not done |
| TDS deduction | Based on actual investments verified, else on higher income |
---
### Recommendations
* Collect **self-declaration early** in the year (e.g., April).
* Request **proof of investments before January (start of last quarter)**.
* If proof not submitted, **deduct TDS without exemptions**.
* Maintain proper records of declarations and proofs.
---
If you want, I can help draft a **proof collection format or reminder letter** to employees for submitting investment proofs on time.
---
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