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TDS FOR ADVANCE PAYMENT

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PRASANNA KUMAR

Manager

36 Points Posted on 07 March 2023

Respected Sirs,

While entering into an employment contract with a company they paid me advance salary(signing bonus) for Rs.5Lacs after deducting TDS for Rs.1.70 lacs. Subsequently the contract got cancelled mutually and I returned the entire amount received(less TDS) to them in this FY 2022-23 itself. Now TDS is showing in 26A but not yet reflected in AIS(even after 9 months)

Kindly advise whether the employer can revise the TDS payment in this FY itself OR next year so that it can be adjusted into their other payables. They are asking me to return TDS(1.7L) also advising me to take refund. In that case the advance amount of Rs.5 Lacs will be added into my taxable income as salary and again I will be taxable additionally for that amount.

Kindly advise the best resolution in this case so that I will not be charged any taxes and the employer can revise within the TDS return now.

Kind Rgds

P.Kumar

Replies (3)

Quick Summary

An individual received an advance salary (signing bonus) of Rs. 5 Lacs, with Rs. 1.70 Lacs deducted as TDS. The employment contract was later mutually cancelled, and the full amount (less TDS) was returned in the same financial year. The TDS is reflected in Form 26AS but not in AIS after nine months. The individual seeks advice on whether the employer can revise their TDS payment within the current financial year or the next, to avoid the advance payment being added back to their taxable income. A Chartered Accountant advises that the employer should revise their TDS return and use the challan against other payables, as the individual is not eligible to claim the TDS credit since the income was not offered for tax.