Under recovery of tds from a retired employee

Before I respond to your query, I presume that you retired on 30^th Dec 2011(FY 2011-2012). You received some payment from employer in FY 2012-2013, received your Form 16 for the period 1^st April 2012 to 31^st March 2013 and have already submitted your tax return in December 2012 itself.

Section 192(3) allow the deductor to make adjustments for any excess or shortfall in the deduction of tax already made during the financial year, in subsequent deductions for that employee within that financial year itself.

So there is no default as far as employer part is concerned, they can pay excess taxes recoverable from employee at any part of the financial year & the same can be recovered from you later.

Please note that Employer has not yet submitted annual tax returns (Qtr-4) in which actual taxable income and taxes of all employees are reported, they would be submitting the same by 15^th May 2013.

Hence, in any case you need to revise your tax return for FY 2012-2013 with actual salary and tax details.

As they have provided you amended form 16, I suggest submitting your revised return and refund the tax amount to employer; it would be more convenient for you rather than paying the taxes yourself.

Thks.A  clarification on your presumption:

I did not receive any payment in 2012-13 which was due in the previous year.

The query pertains only to additional tax liability now they traced during FY 2012-13.

It is regarding a car they allowed me at a depreciated value at the time of retirement, which

is  now treated as a perk and attacts ITax.

The employer has not given any reason for revising the Form 16

nor has asked me to deposit the tax dues for FY 2011- 12( not recovered earlier on account

of  car's perk value).

Instead,they have chosen to indicate under recovery of ITax in the revised Form 16 sent now.

Thus it appears to be an effort to  conceal the  employer's failure to recover the tax fully during FY 2011-12 and creating a situation as if I did not pay the Income tax which might attract all penal actions against me while the situation has   not arisen on account of any failure on my part.

When I file a revised return,I do not have any defence to avoid penal action for under payment of Income tax of Rs.1,10,000  which is on account of employer's .failure to honour TDS related obligations.

I seek your fresh advice now.

Rajwani

Hello,

Onus of providing correct Form 16 lies with the Employers. You received your original form 16 in June 2012 and accordingly submitted your tax returns in due course; hence, there is no question of default at your end. Employees are not expected to acquire expert knowledge of tax laws, that’s the reason Employers have been made responsible for TDS from their employees.

Income tax states that where the payer has not deducted or deducted short TDS the Payer is deemed to be “assessee in default” and not the Payee.

Further Section 271C lays down that if any person fails to deduct whole or any part of tax at source or fails to pay the whole or part of tax deducted, he shall be liable to pay, by way of penalty, a sum equal to the amount of tax not deducted or paid by him.

Since employer is treated as “assessee in default”, employer is obliged to pay such tax out of his own pocket. This view has been taken by Income Tax in many cases.

There is a provision, if such tax has been paid by employee himself, employer is not considered as “assesse in default” so one of the option could be:

1. You pay the tax as self assessment and revised you tax return and.
2. Your employer reimburse you the tax amount along with inrerest and cost of submitting revised returns.

You can explain your situation to employer, if required; escalate the matter with senior authorities.

I request other experts for thier inputs.

May I request for any other/additional info on the subject.

That will help me initiating action .

A salaried employee would not know that there had been short deduction of tax at source unless the financial year is over and by the time he would come to know about short recovery of TDS, the time for payment of self assessment tax would be over. In can your tax time limit of submitting personal returns has also been lapsed. Employer has been held as defaulter in such cases several times and it has been held that employee would not be liable to pay any interest or penalty.

You can google “yashpal sahni versus assistant commissioner i-t” please refer point 16 & 17 of the judgement, it is clearly stated that responsibility to deduct proper tax is of employer.