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Interest under section 234b & c on arrears of salary received.

Tax queries 290 views 1 replies

My client is a Government Employee & the only source of Income is  Salary Income. During the year 2017.18, they have received Arrears of Salary from Government. They have validly filled ITR 1 & Form 10E for the FY 2017.18. 

They have received Intimation u/s143(1) from CPC & they charged Intrest u/s 234B & C.  Against that we have also filled rectification request but no change in rectification order & same interest liabilities are continue.

My question is how they can charge Intrest on Arrears of Salary. Is it right in Law ?? Are salaried employees supposed to pay Intrest on that??? 

 

Your prompt response will be highly appreciated with relevant notifications/ circulars if any. 

Replies (1)

Department is right in charging interest over late receipt of tax (or TDS) of preceding year in previous year.

Employer may not be at fault always, as he may have to pay additional salary as arrears because of court/commission order. (ordered in previous year)

Employer pays the amount of arrears in previous year with TDS deduction as per the total salary paid in previous year.

But when employee wishes to claim that arrears as of preceding year/s, he has to also pay for the late payment of TDS as the same was supposed to be paid to department in corresponding (preceding year), but paid in previous year.

In future, form 10E may get modified to adjust the interest calculation for the adjustment of salary as arrears of preceding year.

Hope you would have understood the point from department's angle.


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