Hi Friends,
I have recently come across a situation and need your advice.
I work as independent consultant and have one of my clients whom i regularly provide services have deducted TDS to tune of Rs 10000 and deposited for me without my knowledge. I came to know about it as I can view TDS paid on my behalf thru Form 26AS and I did recently accidentally checked. I get payments in cash from said client and that too not very high amount say couple of thousands per month based on services rendered. I am not employed by the client in anyway and its a verbal consulting understanding on need basis.
Now I know the right thing to do is to ask the client why he has shown TDS for me for such high amount without my knowledge. My thought is that he wants to claim people as employees to claim deduction as expenses.
I was wondering what do i lose even if i keep mum and assume ignorance. Does it hurt me in anyway in long run. I never paid taxes and I was never intimated by client. Infact if i show the corresponding salary in my income; my tax return will be strong as i did not had much income in few months in this financial year.
Apart from morality issues; what else are the potential known risks if i follow this approach?
I just want to weigh in what risks and potential difficulties i may face.
Pls share your thoughts.
CAclubindia
