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Investment declaration - salary tds query

Ravishankar K (Accountant) (461 Points)

30 July 2013

Dear Friends,

Every year we circulate the investment declaration forms to our employees. I noticed that some employees are submitting investment declaration forms without proof and are able to provide proofs for only 50% of the declared amount, ie. if someone submits for 150000/- they are able to show for only 75000 in last months the tax revisions are done and heavy tax is deducted.

I want to know whether should we ask employees to submit the investment proofs with declaration or atleast 50% of investment proof of declared amount should be submitted as its not possible that an employee will make investments directly in the last month.

Please guide me how you are doing.

regards,

Ravi

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Mihir (Wealth Manager) (5293 Points)
Replied 30 July 2013

It is the employer's obligation to deduct TDS from salary as per the prevalent tax rates. If the employee has other income, the TDS deducted may have been short with regards to the total income of the employee, in which case, the IT dept can consider the employer at default. Therefore, collecting the declaration from the employees regarding their other incomes, if any, will not only allow the employers to deduct correct TDS, but also safeguard the employer in the event of a tax demand on the employee. IT dept cannot enforce the employer to collect proofs of investments made by each and every employee; mere declaration will keep the employer safe.

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