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Important query please help

sonu singh (accountant) (58 Points)

11 December 2015

ACTUALLY MY RELATIVE GOT DEMAND NOTICE FROM IT DEPT. AS IN FY. 12-13 HIS EMPLOYER COMPUTE SALARY INCORRECT AND ON BASIS OF FORM 16 GENERATED BY HIS EMPLOYER HE FILES RETURN.. NOW, IT IS FOUND THAT SALARY IS HIGHER i.e, HE HAS TO PAY MORE TAX.

SO MY QUESTION IS, WHETHER EMPLOYER OR EMPLOYEE, WILL BORNE RESPONSIBILITY? CAN HE FILE REVISED RETURN? EMPLOYEE OR EMPLOYER, WHETHER RESPONSIBLE TO DELAYED INTERERT AND IF YES THEN WHO?

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8 Replies

Z ( ) (2965 Points)
Replied 11 December 2015

It is employees responsibility to compute the tax and file the return, even in instructions for filing the returns its specifically mentioned that if salary as computed in form 16 is not correct then correct income should be computed.

Since the return relates to FY 12-13 , time limit for filing the revised return u/s 139(5) was 31.03.15

[i.e 1 year from the end of relevant assessment year]

Hence return can not be revised.

Yes interest might also be required to be paid [Refer S.234B and 234C] in this regards (or use some online calculator) But this must have been computed when you received the notice.

Further if this demand is not paid within 30 days then interest would also be levied u/s 220.

You can ask employer for compensation because his computations were wrong and employee acted on the information provided by him ,but under law, the burden is on employee only. Moreover employee must be having full knowledge as to how much his salary is by salary slip , Receipts in Bank A/C.

Demand should be paid soon if its correct.

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balaji (employee) (41 Points)
Replied 11 December 2015

I agree with above answer.

But there is a chance to waive of Interest by A.O.

i.e., 1. Ask to employer to correct the e-TDS return with correct salary and ask to provide revised Form 16.

2. Prepare a detailed covering letter and mention the difficulty of filing of revised return and attach revised Form 16.

3. Request him to waive the Additional TDS & Interest on TDS.

If the A.O not accepted to waive Interest you can go to Appeal.

balaji (employee) (41 Points)
Replied 11 December 2015

I agree with above answer.

But there is a chance to waive of Interest by A.O.

i.e., 1. Ask to employer to correct the e-TDS return with correct salary and ask to provide revised Form 16.

2. Prepare a detailed covering letter and mention the difficulty of filing of revised return and attach revised Form 16.

3. Request him to waive the Additional TDS & Interest on TDS.

If the A.O not accepted to waive Interest you can go to Appeal.

Ramanuj (Accountant.) (834 Points)
Replied 11 December 2015

agree with above

Z ( ) (2965 Points)
Replied 11 December 2015

There is one more issue in this which I didn't considered at first.

If it was merely the increase in the income without any shortage of tax then the tax department would not have sent the notice. It appears that there is default in deduction of Tax at source. TDS should have been less than the tax payable (I am qute sure of this)

I AM PRESUMING THAT SALARY WAS ACTUALLY PAID AND WAS NOT OUTSTANDING (let me know if this presumption turns out to be wrong) [Quite sure of this aswell]

This means that your employer has not complied with provision of S.192 as per which tax on salary has to be deducted at the time of payment.

Since the employer also did not deducted the tax, he too is at fault.

Ideally in such a situation , the employee is to pay the tax because as per S.15, salary is taxable on acrural basis (whether received or not) and EARLIER when employer would deduct the tax and pay it, then the employee can claim refund of the tax so paid by himself (so in net,to some extent the liability is born by the employer.

[There would be little or no interest liability, if assessee paid it timely]

Now, there have been an ammendment, as per which if the employee had paid the tax so due and showed this in HIS (employees) return filed within due date, then employer would not be treated as assessee in default and it would be deemed that he did deducted the tax and paid it.

But in your case, since you did not paid the tax, this amendment is not applicable.

In short, its still possible for you to claim benefit..

Inform employer that he has not followed the provisions of S.192 and hence to the extent of default, by virtue of S.40a, 30% of the salary on which tax was not deducted shall be the disallowance to the employer and the liability for short deduction of tax at source is also payable as per sec 201.

Due to this the employer will have to deduct the tax on salary and employee will receive the credit of the same and hence the tax liability of the employee would be decreased as he would get the credit of that and there shall be consequental decrease in the interest aswell.