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Adv tax instead of tds on sal

Kiran. S (CTO) (745 Points)

18 August 2015

My Relative asked his prospective employer to give TDS amt to him and he will pay Adv tax immediatly and give copy of tax challan to employer.

1] first he does not trust any employers bcoz they fleece now a days [small ones]

2] The second advantage is Int on Adv tax is from next month I think and if TDS is paid by employer the int starts from start of assesment year.

Can my relative ask for paying Adv tax instead of Employer paying TDS quarterly. Will the IT confront the employer.

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8 Replies

Rajagopalakrishnan R (PARTNER) (1417 Points)
Replied 18 August 2015

Yes it is the duty of every employer to deduct tax at sourTDS, ce for all employees having taxable income. Payment of advance tax is not an alternative. If the employer does not deduct tax, he will be penalised for non deduction by way of interest penalty etc. Also the salary paid without TDS will not be allowed to be deducted as his expenses.

By the way, for every employee it is better to opt for TDS as in case of shortfall in tax, interest will run only from 1st April of AY, whereas for Advance tax, interest will run for instalments separately as well as from 1st April of Ay.

mahendra (STUDENT) (64 Points)
Replied 18 August 2015

In my view... If employer deducts tds frm salaries., it is the duty of the employer to remit that amount to the govt, if not then it wil be a case of tds deducted but not paid.... Again, sec 192 casts an obligation on the part of the employer to deduct tds. If the employer fails to deduct he wil be treated as assessee in default... So, mostly the employer wil not agree for that... There is an exception that if the employee files ROI as per sec 139 and showd such income in return of income and paid all the taxes in respect of such income then employer wil not be treated as assessee in default... But the employer has to get certification frm chartered accountant... So, usually they wont take all these risks...

Kiran. S (CTO) (745 Points)
Replied 18 August 2015

But as far as the amt goes in govt account either by TDS or Adv Tax - what is the problem.

By Adv tax money reaches govt acc faster [every month] while TDS is paid quarterly .

Fradulent employers donot pay at all sometimes and employees is left in Lurch at the time of filing return.

Kiran. S (CTO) (745 Points)
Replied 18 August 2015

Isnt it advantage to the Govt.

mahendra (STUDENT) (64 Points)
Replied 18 August 2015

If every one followed advance tax concept corectly then why there is a need to impose tds concept on employers? It is to curb the unauthorised practices and also to give relaxation to employees

mahendra (STUDENT) (64 Points)
Replied 18 August 2015

U can file itr by using form 16. if tds deducted by employer and it is shwd in form 16 u can file itr with that.. The employee is nt responsible for non payment of tax to govt.. If u file itr with form 16 then ur employer wil get notice and he wil be take care of that..

Kiran. S (CTO) (745 Points)
Replied 19 August 2015

Some Employers dont give PAN no of some of the emloyees in the TDS return. They change employees frequently. What happened to King fisher Airlines. did Mallaya pay TDS of employees. There are plenty of Employers who do fraud. The employees are left to fend for themselves.

Sec 205 will apply if you have proof that employer have deducted TDS. If complain is given to TDS AO , Employers do settings and Employee is left with no option but to goto Court. How long legal battle will go on one does not know. If you have employers like Tata and Birla it is Ok.

Z ( ) (2960 Points)
Replied 19 August 2015

I concur with Rajagopalakrishnan R

1st u/s 192 it is the responsibility of the employer to deduct the tax, your relative's proposition that the Tax deduction amount be given to him is not healthy one . The relative will pay advance tax thereby nulling his tax liability but what about the employer? He would receive notice from tax authority for not deducting tax from salary when it is paid. And employer would be the one to go in court.

Even in case of King Fisher Airlines, they did issued form 16 to their employees but the tax was not remitted to the department. Consequently both the employer and employee received the notice. When the employees of king fisher airlines went they were assured by the respective AO's that this amount will not be recovered from them, all these notices are system generated . they were given protection u/s 205

I have seen such small cases where employer does not deduct tax of employer (be it grudge or otherwise) I advice to complaint it to TDS department , but obviously for job safety, employees prefer paying tax from their own pocket and NO TAX IS DEDUCTED FROM SALARY.

If TDS certificate is not issued then you can make that employer penalized but he wont be deducing your tax if he is not giving you the certificate. Hevay interest and penalty would be levied.