Salary paid for 4 moths, tds on 12 moths?

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

21 February 2014 If an employee is paid salary only for 4 months, i.e from April 2013 to July 2013. He is still in employment as on March 2014. That means, salary is not paid from August 2013 to March 2014 due to financial crisis in the company.

Employer wants to deduct TDS on 12 months salary. This causes genuine hardship to the employee since he cant make adequate investment due to only 4 months salary paid to him. If he does not make investment, TDS shall get deducted.

Whats is the legal provision on this case?

whats is the remedy employee has?

Urgent attention required!!

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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21 February 2014 1. As per Section 192 of the Income Tax Act, tds on salary is to be deducted at the time of PAYMENT.

So if salary is not paid to the employee then TDS is NOT required to be deducted.

2. However, salary is taxable on receipt or accrual basis, whichever is earlier. So the salary income will be taxable even if you do not get the salary and you will have to pay tax.

Querist : Anonymous

Querist : Anonymous (Querist)

21 February 2014 Thank you so much. This resolves the question.

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CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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25 February 2014 You are welcome. You should use the thanks button to convey your thanks.