LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

Query About Form 16

Kumar (Engineer) (39 Points)

17 June 2011

Hi All,

I was working with one Public company in Pune during last Finanical Year 2010-2011 .

i left that company in March 2011. They have not paid me salary from Nov 2010 to March 2011 with reason that they don't have funds and pending salary will be given when they got sufficient funds . No date is given for this. This is case with atleast 60 more employes and many of them have left the company like me.

They have not given us FORM 16 till date....

Now I wonder,

1) Can they issue Form 16 to us without paying Salary for those months from Nov 2010 to March 2011?

2) What if they didn't give Form 16 as well as our pending salary?

3) Am I liable to give TAX for the period of Nov 2010 to March 2011 where I actually didn't get any salary?

Please advice me.

Waiting for your response.

~ Kumar.

Reply
Follow
Share

8 Replies

Anshu Garg (working) (139 Points)
Replied 17 June 2011

you are not liable to tds for nov. to march bcoz tds on salaries should be deduct at the time of payment and not at the time of credit

Kumar (Engineer) (39 Points)
Replied 17 June 2011

Thanks Anshu,

So does this mean that , they are not supposed to show any deduction of TDS from Nov 2010 till March 2011 and our FORM 16 should reflect TDS deducted for April 2010 till Oct 2011 during which we got actual sallary?

Please correct me if I am wrong.

Shruthi (PCC Student) (111 Points)
Replied 17 June 2011

Actually, In your total income Salry from Nov 10 to Mar 11 will be included on due basis. So anyway while calculating tax liability you will be asked to pay tax for the period Nov 10 to Mar 11 also irrespective of you have received it.

So after calculating the tax liability deduct the TDS paid so far (i.e., till oct 10) and is some excess tax burden still remains, you will have to pay from your pocket only (answer for ur 3rd quest)

The next step is to apply in Form 13 with the Assessing officer for non deduction of TDS by your X employer on the salary which you are going to receive in future when they get sufficient funds for the period Nov 10 to Mar 11 by notifying that you've paid the tax liability for the FY 10-11. With this application, the Assessing officer will give you a certificate. Produce that certificate to your X employer for not to deduct tax in their future payment. (answer for 2nd Question _ so no worries about form 16 on pending salary as they will not deduct TDS at all if you produce that certificate)

Think u'r clear.

And for your 1st quest:

No your employer cant issue form 16 for the period Nov 10 to Mar 11 without paying the salary.

1 Like

Kumar (Engineer) (39 Points)
Replied 17 June 2011

Thanks Shruti !

CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 17 June 2011

Originally posted by : Shruthi
	Actually, In your total income Salry from Nov 10 to Mar 11 will be included on due basis. So anyway while calculating tax liability you will be asked to pay tax for the period Nov 10 to Mar 11 also irrespective of you have received it. So after calculating the tax liability deduct the TDS paid so far (i.e., till oct 10) and is some excess tax burden still remains, you will have to pay from your pocket only (answer for ur 3rd quest) The next step is to apply in Form 13 with the Assessing officer for non deduction of TDS by your X employer on the salary which you are going to receive in future when they get sufficient funds for the period Nov 10 to Mar 11 by notifying that you've paid the tax liability for the FY 10-11. With this application, the Assessing officer will give you a certificate. Produce that certificate to your X employer for not to deduct tax in their future payment. (answer for 2nd Question _ so no worries about form 16 on pending salary as they will not deduct TDS at all if you produce that certificate) Think u'r clear. And for your 1st quest: No your employer cant issue form 16 for the period Nov 10 to Mar 11 without paying the salary.

agreed

manoj (acct) (26 Points)
Replied 20 June 2011

Now some more questions arise.

1. Can Employer book whole salary expenses upto march?

2. Will he not bound to deduct tax, because he has not actually paid it to the empolyee?

3. Then what about the disallowance of Salary Exps on non-compliance of TDS?

Shruthi (PCC Student) (111 Points)
Replied 22 June 2011

Answer to 1st:

If the E'er follows mercantile system of accounting - then he should book for whole year that is till march.

If the E'er follows cash system of accounting - then he should book only till october.

But mostly company should follow only mercantile system & therefore, bopok for whole year.

Answer to 2nd:

He is not bound to deduct Tax, because Sec.192 clearly says, Tds to be deducted only at the time of payment

Answer to 3rd:

Non compliance of Tds comes only in the following cases:

1.When u'r bound to deduct but not deducted

2. When u deducted and not remitted within due date.

So, here we cant call it as non compliance.

And another thing, In business income, no where we can call as non compliance if Tds has not been deducted with respect to salay. Tds non compliance will come only for other payments like (interest, commission etc) and salary paid outside india without tds...