Tds short deduction from salary

This query is : Resolved

rushabh shah (Querist)
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12 February 2014 WE SHORT DEDUCTED TDS FROM SALARY OF EMPLOYEE BUT LATER ON EMPLOYEE HAD PAID THE SHORT DEDUCTED TAX BY SELF ASSESSMENT TAX WHILE FILING THEIR RETURN.

NOW WE HAVE RECEIVED NOTICE FROM TDS DEPARTMENT FOR SHORT DEDUCTION DEMAND.

SIR IS THEIR ANY CASE LAWS OR SECTION SUPPORTING THE SAME?

motichand gupta

motichand gupta (Expert)
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12 February 2014 your case is covered first proviso to sec 201(1).In this case, you have to submit Form no. 26A under Rule 31ACB.

For this section, dufficult to get case law.

rushabh shah

rushabh shah (Querist)
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13 February 2014 sir,, whether this form is applicable for F.Y. 2012-13.

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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28 July 2025 Regarding your query on **short deduction of TDS from salary and subsequent self-assessment tax paid by the employee**, here’s the clarification:

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### Situation Summary:

* Employer **short deducted TDS** from employee’s salary.
* Employee **paid the shortfall themselves** as self-assessment tax while filing their Income Tax Return.
* Now, the TDS department has issued a **notice for short deduction demand** to the employer.

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### Relevant Provisions:

**Section 201(1)** of the Income Tax Act treats the deductor (employer) as an "assessee in default" if tax is not deducted or short deducted. The employer is liable to pay:

* The **amount of tax not deducted or short deducted**, and
* **Interest under Section 201(1A)** on such shortfall.

However, the Act also recognizes that if the deductee (employee) has paid the tax on their own, it affects the recovery from the deductor.

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### Key Points & Forms:

* **First proviso to Section 201(1):**
This allows the employer to furnish a **declaration in Form 26A (Rule 31ACB)** to the Assessing Officer showing the shortfall in TDS was made good by the deductee (employee).

* On submitting Form 26A with supporting evidence (like acknowledgment of return showing self-assessment tax paid), the department can consider not demanding the amount from the employer.

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### Applicability for FY 2012-13:

* Yes, **Form 26A is applicable for FY 2012-13** and subsequent years where such short deduction cases arise.

* You should submit Form 26A to the jurisdictional Assessing Officer at the earliest with proof of tax paid by the employee.

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### Any Case Laws?

* This is a fairly procedural matter; hence, specific case laws are rare.

* However, many rulings emphasize the responsibility of the employer as deductor but also recognize relief where the tax due has been paid by the deductee.

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### Summary & Suggestion:

* You (employer) remain liable for short deduction initially.
* Since employee has paid tax, submit **Form 26A** to claim relief.
* Provide proof of employee’s self-assessment tax payment (ITR acknowledgment).
* Follow up with your Assessing Officer to avoid penalty or demand.

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If you want, I can help draft the submission or guide you through the process of filing Form 26A. Would you like assistance with that?

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