Tds on salary

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Rachit (Querist)
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28 December 2012 How to disclose in Form 16 : Salary received by an employee from previous employment and TDS deducted thereupon by the previous employer during the same financial year???

@VaibhavJ

@VaibhavJ (Expert)
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28 December 2012 Hey Hi,

Salary and TDS pertaining to previous employer should not be presented in the later employer’s Form 16 for the following reasons.

1. There is no place in the current Form 16 format (as prescribed by the tax authorities) to present salary and TDS amounts pertaining to previous employment of an employee.

2. A company, while it can consider salary and TDS pertaining to another employer for the purpose of tax calculation on salary, cannot certify salary and TDS pertaining to the other company in its TDS certificate (Form 16).

3. If the previous employer salary and TDS are presented in Form 16, there will be a mismatch between data in the annexure of the fourth quarter Form 24Q and Form 16. This is because a company cannot present salary and TDS data pertaining to previous employer in its Form 24Q. The Annexure 2 of the fourth quarter Form 24Q contains nothing but details of an employee’s Form 16.

4. If TDS pertaining to the previous employment is added to the tax deducted by the current employer, the Form 16 will show a shortfall in tax remittance by the employer.
For example, let us consider the following:
Tax deducted in the previous employment: Rs. 10,000
Tax deducted in the current employment: Rs. 5,000

If in Form 16 the above two are added, the total tax deducted will be shown as Rs. 15,000 for the year, while the total tax amount remitted (by way of TDS challan payments across months) will only be Rs. 5,000 since the current company can only present the tax amount remitted by it.

This gives an incorrect picture that the employer has not remitted fully the tax amount deducted.

In short, our view is: “Consider previous employer salary and TDS for tax calculation, but not for display in Form 16.”

I hope your query has been resolved.

Thanks!!

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Rachit

Rachit (Querist)
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28 December 2012 @ Vaibhav,
Thanks for your reply.
The only grievance left is that when one considers the previous employer's salary and TDS details for Tax calculation, the amount of tax deducted would prima facie show as excess in absence of the above disclosure. Whether the said TDS amount needs to be shown as refundable in the last line of Form.16.

For example lets consider the following:
The new employee has joined in the month of March at salary of Rs.1,00,000/- per month.Salary from previous employer for 11-months period was Rs.10,00,000/- TDS deductable by the current employer Rs.30,900/- after taking into consideration salary from previous employer.Form 16 would reflect :
Salary Paid Rs. 1.00 lac
TDS Rs. 30,900/-
(last row) Tax Refundable Rs.30,900/- ?? as Tax is NIL on Rs.1.00 lac considered isolatedly. in Form 16.

Also what should be the amount shown in Form 16 (Sr. No.17) in regards Tax Payable?

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@VaibhavJ

@VaibhavJ (Expert)
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28 December 2012 Hi

Nope you can not show any Tax paid to previous employer by existing employee as refundable in your Form 16.

Thanks.

Rachit

Rachit (Querist)
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28 December 2012 Its in regards tax deducted by the current employer on the amount of salary paid by it. As tax liability is NIL on Rs.1.00lac salary paid (considering isolatedly)

@VaibhavJ

@VaibhavJ (Expert)
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28 December 2012 Hi

In your case TDS deducted by you will be nil hence if you are issuing form 16 to him then TDS will be NIL.

For TDS made by previous employer form 16 would be issued by him & he will mention TDS amount in his form 16. So you need not worry.

Thanks!!