FORM 16

TDSis Liability of an EMPLOYER and not of an Employee.

You has to Deduct Tax from the salary of employee. TDS deducted by Bank is of income other than salary. So you should deduct TDS from Salary income. Further he will get the refund of Excess TDS.

Dear Aashima,

Rule 26 provides a declaration form to be submitted by employee to his employer in such situations  & based on such declaration u can procced by not deducting TDS

I fully agree with AMIR..

But AMIR, Will salary Expense without TDS, be allowed as deduction in IT Act to the company ?

Dear Rajesh,

First of all sec 40(a) doesnot covers cases where salary is paid to residents in India..

Further, These two provision are not conflicting, this rule can be understood as an exception to the general principle where expenses are allowed even in case of non deduction of TDS

FULLY AGREE WITH MR AMIR.    MAY I KNOW YOUR ACTUAL NAME MR AMIR ?

well well well,

thanks to all those who have replied my querry, but i think so  as per Sec 192 ( 2B) , it says

"2B) Where an assessee who receives any income chargeable under the head "Salaries" has, in addition, any income chargeable under any other head of income (not being a loss under any such head other than the loss under the head "income from house property") for the same financial year, he may send to the person responsible for making the payment referred to in sub-section (1) or particulars of -  (a) Such other income and of any tax deducted thereon under any other provision of this Chapter; 

(b) The loss, if any, under the head "Income from house property,"  in such form and verified in such manner as may be prescribed, and thereupon the person responsible as aforesaid shall take -

(i) Such other income and tax, if any, deducted thereon; and 

(ii) The loss, if any, under the head "Income from house property",  also into account for the purposes of making the deduction under sub-section (1) :

Provided that this sub-section shall not in any case have the effect of reducing the tax deductible except where the loss under the head "Income from house property" has been taken into account, from income under the head "Salaries" below the amount that would be so deductible if the other income and the tax deducted thereon had not been taken into account.

so i think so , TDS deducted by bank can not be taken into account. company is liable for full tds

this liab can be incresed by other income but can not be reduced by other's deducting TDS on that income.

Thank to Rajesh, Amir and Ritesh

dear aashima
                              The basic purpose of TDS provisions is that govt gets the due income tax of a person on his total income.If an employee provides enough documentary support (like bank certificate that so much of tds will be deducted) or the employee takes responsilbily on his shoulders by giving declaration to company that his full tax liability will get discharged by other ways, then the employer can rely upon it and do not deduct TDS.    for example while calculating TDS deductible the employer takes into  consideration the 80C savings by employee on the basis of his documentary proof,similarly tds claim on other basis is also considerable for not deducting TDS or lesser deduction.

Dear Aashima,

Ya I also thought about this Proviso, but the next thing which came to my mind is exactly what friend Ritesh has mentioned..

The better thing would be to tell the employee to get a certificate of No deduction from AO u/s 197 

Agree with Mr. Ritesh and Mr. Amir

If employee furnishes his other sources of income and other thing, and on final calculation if no tax is deductable, company should not deduct the same.

thanks!

but can i issue form 16, which shows TDS liab pending on the part of company?

will it be a valid form 16

Dear Aashima,

Issuing Form 16 which shows tax payable will attract interest/penalities under the Act.

You had rightly mentioned on that day, the proviso to the section restrict us to do that, therefore as I suggested on that day better option would be to tell the employee to get a copy of no deduction Certificate u/s 197 from his AO, otherwise his TDS should be deducted...

I have one question.

Is the interest income included in the form 16 of the employee when u calculated the tax liab. of Rs.2340/-.

If it doesnt include then u deduct tax, as his TDS on interest income will be sufficient to nullify tax on that income only and not salary income.

Plus its ur liab to pay.[b] So do it [/b]

If its a refund then anyways the employee will get it back.

Regards,

Kaushik.

you have to scurtinize form 12B furnished by employee, and match his words with your present situation, 

irrespective of tds on interest you have to deduct TDS on salary portion, and ask him to get refund by filing ITR