Hi. I am Namrata Joshi. I have a query?
I have taken the declaration from the employees of my company in the month of June 2018.
now I have given a deadline of 31st January to the employees to submit the proof of the investment as per the declaration submitted by them.
In case some employees are asking for time up to 31st March to submit their investment proof.
In this scenario as an employer Can we deduct tax from their salary in the month of January, February and March?
Is there any Supreme Court ruling to justify that an employer has a right to deduct the tax from the salary of employee before 31st March?
From India, undefined
I have taken the declaration from the employees of my company in the month of June 2018.
now I have given a deadline of 31st January to the employees to submit the proof of the investment as per the declaration submitted by them.
In case some employees are asking for time up to 31st March to submit their investment proof.
In this scenario as an employer Can we deduct tax from their salary in the month of January, February and March?
Is there any Supreme Court ruling to justify that an employer has a right to deduct the tax from the salary of employee before 31st March?
From India, undefined
Hi Namrata,
Deducting TDS on estimated basis is the legal responsibility of the employer which are treated as advance tax. For the convenience of employees, projected tax liability is being calculated in the first quarter itself and monthly TDS is being implemented. Employees in their own interest submit their declarations with copies of proof of investments & house rent paid/other receipts like rental income, interest, dividend etc well in time so that employers can make out projections during Dec.and plan proportionate monthly TDS during the last quarter i.e. Jan, Feb & March so that TDS on total taxable income of an employee is effected and remitted. This will enable employees to avoid interest on delay in remitting adv.tax to the extent possible. When this not happening or not fully taken care of, employees have to face hardship to hit the deadline of compliance before 31st of March. It's the responsibility of the employer to account for TDS of every employee subjected to Tax who are drawing taxable income. This responsibility is imposed on employers under Sec. 192 of IT Act.
The Income-Tax Act casts responsibility on the employer for tax deduction at source (TDS) on Salary at the time of payment of salary to employees whose salary income is above the maximum amount not chargeable to tax. The employer is required to deduct TDS on salary at the average rate of income-tax and deposit the same with the government within the prescribed time. The employer is also required to file withholding tax returns and issue TDS certificate to the employee.
Various penalties are levied on the employer in case of default, making the entire procedure equally painful for employers.
So, you must have started realising that the grass on the other side is not as green as you thought. Though, from the above it is understood that TDS is solely the obligation of the employer but, if as an employee you are aware that there is a TDS default, then you may be held responsible too. If your total income exceeds the maximum amount not chargeable to tax and no TDS is being deducted by the employer, then you are under an obligation to pay tax through the advance tax route
You should estimate your total income for the year that could comprise of salary, house property, interest income etc. Relevant deductions applicable to each source of income, on account of eligible investments, interest on housing loans, etc, can be considered to calculate the taxable income. On this amount, you should calculate the tax payable as per the applicable tax rates.
Having arrived at the gross tax liability, reduce the amount of TDS suffered/ likely to be suffered on the above income. If the balance tax payable exceeds Rs 10,000, you will be required to comply with the advance tax provisions. The entire amount becomes payable as advance tax in four installments on or before June 15th, September 15th, December 15th and March 15th, during the financial year.In case you miss the advance tax installments, taxes can also be deposited by way of self-assessment tax post April 1 (after the end of financial year). In case the employer has defaulted in TDS, it would be your responsibility to deposit taxes by way of advance tax/ self-assessment tax as ultimately, taxes are to be deposited on your income as an individual/employee drawing taxable income(salary).
Failure to deposit taxes could lead to concealment of income on your part, resulting in penalty to be paid by you equivalent to 100-300% of the tax amount not deposited.Further, there are interest implications as well , but there are judicial precedents which indicate that if taxes were required to be deposited by way of TDS and have not been done, the recipient of income is not required to pay interest.
Going forward, before you plan your month-end celebrations, just glance through your pay stub. Instead of creating a hue and cry over the tax figure, be thankful to your employer for taking care of your taxes and saving you from a lot of hassles.
-------------
The attached documents will give you the required info. on TDS and relevant issues.
From India, Bangalore
1075Deducting TDS on estimated basis is the legal responsibility of the employer which are treated as advance tax. For the convenience of employees, projected tax liability is being calculated in the first quarter itself and monthly TDS is being implemented. Employees in their own interest submit their declarations with copies of proof of investments & house rent paid/other receipts like rental income, interest, dividend etc well in time so that employers can make out projections during Dec.and plan proportionate monthly TDS during the last quarter i.e. Jan, Feb & March so that TDS on total taxable income of an employee is effected and remitted. This will enable employees to avoid interest on delay in remitting adv.tax to the extent possible. When this not happening or not fully taken care of, employees have to face hardship to hit the deadline of compliance before 31st of March. It's the responsibility of the employer to account for TDS of every employee subjected to Tax who are drawing taxable income. This responsibility is imposed on employers under Sec. 192 of IT Act.
The Income-Tax Act casts responsibility on the employer for tax deduction at source (TDS) on Salary at the time of payment of salary to employees whose salary income is above the maximum amount not chargeable to tax. The employer is required to deduct TDS on salary at the average rate of income-tax and deposit the same with the government within the prescribed time. The employer is also required to file withholding tax returns and issue TDS certificate to the employee.
Various penalties are levied on the employer in case of default, making the entire procedure equally painful for employers.
So, you must have started realising that the grass on the other side is not as green as you thought. Though, from the above it is understood that TDS is solely the obligation of the employer but, if as an employee you are aware that there is a TDS default, then you may be held responsible too. If your total income exceeds the maximum amount not chargeable to tax and no TDS is being deducted by the employer, then you are under an obligation to pay tax through the advance tax route
You should estimate your total income for the year that could comprise of salary, house property, interest income etc. Relevant deductions applicable to each source of income, on account of eligible investments, interest on housing loans, etc, can be considered to calculate the taxable income. On this amount, you should calculate the tax payable as per the applicable tax rates.
Having arrived at the gross tax liability, reduce the amount of TDS suffered/ likely to be suffered on the above income. If the balance tax payable exceeds Rs 10,000, you will be required to comply with the advance tax provisions. The entire amount becomes payable as advance tax in four installments on or before June 15th, September 15th, December 15th and March 15th, during the financial year.In case you miss the advance tax installments, taxes can also be deposited by way of self-assessment tax post April 1 (after the end of financial year). In case the employer has defaulted in TDS, it would be your responsibility to deposit taxes by way of advance tax/ self-assessment tax as ultimately, taxes are to be deposited on your income as an individual/employee drawing taxable income(salary).
Failure to deposit taxes could lead to concealment of income on your part, resulting in penalty to be paid by you equivalent to 100-300% of the tax amount not deposited.Further, there are interest implications as well , but there are judicial precedents which indicate that if taxes were required to be deposited by way of TDS and have not been done, the recipient of income is not required to pay interest.
Going forward, before you plan your month-end celebrations, just glance through your pay stub. Instead of creating a hue and cry over the tax figure, be thankful to your employer for taking care of your taxes and saving you from a lot of hassles.
-------------
The attached documents will give you the required info. on TDS and relevant issues.
From India, Bangalore
I have already taken declaration form from employees and have been deducting TDS every month based on the declaration submitted by employee.
But now I have asked them to furnish proof of investment they are asking me to give deadline by end of March h
Can I allow that?
From India, undefined
But now I have asked them to furnish proof of investment they are asking me to give deadline by end of March h
Can I allow that?
From India, undefined
Extending the deadline to end of March will pose problems for both as employer and employees as well. What happens is when the deadline is so extended will have no time to recover TDS and remit in March itself. Which means the obligations are not complied with. The long and short of TDS is estimate the tax and recover thru' TDS and remit it before 31.3. If there is no possibility by extending till 31.3. the tax could be remitted in April which attracts over due interest. So tell those guys who wants this extension they will be doing it at their own risk and cost as you'll have to room to account for savings for the year ended on 31st March within 31st March itself. And it has to be accounted in April which becomes the subsequent year and therefore the employer cannot take them into consideration. So there is no meaning in asking for extension till 31st March. May be, if in case you process the salary for March in first week of April, the subsequent month, somebody may insist why you can't account it. But you should remember one hitch, IT/TDS for the entire year has to be recovered & REMITTED before 31st March. Failing which the assessee, the employee has to remit on their own with interest. The employer has no responsibility over such instances. I only could say, atbest you can consider agreeing for extension till the date of processing your pay roll, maximum.
However, to get over this difficulties, many employers close their attendance somewhere on mid March instead of 1st Mar. to 31st Mar. i.e. attendance is computed for e.g. from 19th Feb.to 20th March (one full month) and process the pay roll. This way they could remit the TDS before 31st March. This practice is followed for all the months.
From India, Bangalore
However, to get over this difficulties, many employers close their attendance somewhere on mid March instead of 1st Mar. to 31st Mar. i.e. attendance is computed for e.g. from 19th Feb.to 20th March (one full month) and process the pay roll. This way they could remit the TDS before 31st March. This practice is followed for all the months.
From India, Bangalore
Hi Namrata
I do not understand. Where is the problem for deduction, if employee fails to comply the requirement? The company is authorised to deduct quantum of tax as per income of the employee comapred to his Tax saving savings. If one has paid extra on TDS can be returned by IT Department on filing of IT return.
From India, Mumbai
I do not understand. Where is the problem for deduction, if employee fails to comply the requirement? The company is authorised to deduct quantum of tax as per income of the employee comapred to his Tax saving savings. If one has paid extra on TDS can be returned by IT Department on filing of IT return.
From India, Mumbai
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