If you are a salaried person, I am sure you might have heard about Form 16. This document is issued by the employers every year. It is your ‘Salary or Income Certificate ‘and has the details of the TDS deducted (Tax Deducted at Source) by your employer.
If your projected income after considering your income tax declaration and provisional investment proofs (if any) is above the basic income tax exemption limit, your employer is bound to deduct TDS from your Salary. The TDS deducted by your employer will then be deposited in Central Govt’s account against your PAN number.
Though TDS is deposited by the employers on quarterly basis, generally they issue Form 16s after end of FY i.e., during April to May period.
(Kindly note that if you are not liable to pay taxes i.e., where TDS is not applicable, it is not mandatory for your employer to issue Form-16.)
There are chances of discrepancies and disputes among employer – employee – the IT department regarding the TDS. The possible reasons can be;
- Employer deducts TDS but fails to deposit it in central govt account. This can be intentional or due to ignorance.
- There are cases where Employees provide wrong PAN numbers when joining an organization. So, even if an employer deducts TDS and deposits amount with the Govt, this is not reflected in the concerned Employees tax credit statement (Form 26AS).
- Employer may record wrong PAN numbers of their employees.
- Another possible reason can be, TDS is deducted but a different amount is deposited.
Below are some of the queries on ‘TDS deducted but not deposited’ cases that have been posted on ReLakhs.
How to check if TDS deducted by your Employer is deposited against your PAN?
Your employer may issue Form 16 (TDS Certificate) on annual basis. But, don’t wait till May to cross-check the TDS deducted details with the details available in your Form 26AS. When a TDS is deducted by your employer, it gets reflected in your Salary slip. So, you get to know if the TDS has been deducted or not through your salary slip.
What is Form 26AS? – Form-26AS gives you all the details of Tax credits. It is a form which indicates the tax that has been deducted and has also been deposited with the Govt. Any TDS which is deducted from your income is deposited by the deductor to the government against your PAN number. This way, TDS deducted against your income is linked to your PAN and can be viewed and verified from your Form 26AS. The TDS amounts reflected in Form 26AS and Form 16/16A should always be the same.
If the TDS which has been deducted from your salary is deposited with the Govt, it has to be found in your Form 26AS. So, it is better to check the TDS deducted details in the same Quarter itself, by visiting the IT e-filing website.
Below is the procedure to check your tax credit statement online;
- Kindly login to IT e-Filing portal with your credentials.
- Click on ‘View Form 26AS (Tax Credit)’ link.
- You will then be re-directed to TRACES website. (TRACES – TDS Reconciliation Analysis and Correction Enabling System)
- Click on ‘View Tax Credit (Form 26AS)’ option
- Select applicable Assessment Year, view as format (PDF/HTML/Text) and click on ‘Download’ button.
- You can find the details of TDS deducted by your employer(s) in Part-A section of your Form 26AS. One of my friends has shared his AY 2010-11 Form 26AS with me. I have taken screenshot of his tax deducted details as below. You can find his employer’s name (deductor), TAN number of employer (cross-check if it is the same in your Form 16), salary credited, Tax deducted and TDS deposited details.
- We have cross-checked these details with the details available in his Form 16 and they are matching.
- Similarly, you can also cross-verify the TDS details in your Form 26AS and Form-16. Advisable to check this once in every quarter or atleast before the end of every Financial Year.
TDS on Salary deducted but not deposited by my Employer
The IT department matches your Income Tax Return details with your Form 26AS. So, when your employer deducts TDS but fails to deposit (or) deposits against an incorrect PAN, leads to non-payment of TDS. The IT dept may issue an ‘outstanding tax demand notice’ to the tax assessee. (Read: ‘How to pay Outstanding Tax Demand online?‘)
Can the Tax dept recover the tax amount from you (employee) again?
The CBDT (Central Board for Direct Taxes) in one of its circular has clarified that the liability to pay income tax, if TDS is deducted at source, will be on the employer and not on the employee. The employer also has to bear any interest charges and penalty for late tax filing.
It has also been stated that in case an employer fails to provide you a Form 16 (by 31st May) after having deducted TDS – the minimum penalty that the employer will pay is Rs 100 for every day the default continues. If you do not receive your Form 16, you can write about this failure of your employer to your Assessing Officer, who may take appropriate action against the employer.
TDS not deducted and not deposited
This scenario occurs mainly when you are employed with multiple companies in a Financial Year. Your previous company may just settle the dues without deducting any TDS. In such a case, you need to add your income from all the sources and calculate the tax liability correctly and pay them.
Excess TDS deposited & Refund
This may happen because you do not submit the investment proofs details to your employer within the stipulated time and they may deduct TDS from your salary.
- In case, if your declared amount is less than your actual investments, your company might have deducted higher TDS. So, you can claim this as ‘refund‘ while filing your taxes.
- Even if you miss the deadline for submitting the investment proofs, you can still claim all the tax deductions (except few allowances like LTA or Medical allowance) while filing your Income Tax Return.
- In case, if your declared investment amount is more than your actual investments, you have to pay additional taxes while filing your Income Tax Return (or) your company may re-calculate your tax liability and can deduct taxes accordingly.
Form 16 Correction & ITR
If you find any discrepancies between your Form 16 & Form 26AS, inform your employer (or ex-employer) immediately. You can request them to correct or revise the TDS entries in your Form 16.
Even after repeated request if they do not update your form 16, you may go ahead and file your ITR.
- If wrong TDS amount is reflected in your Form 26AS, file your ITR based on Form 26AS and mention the employer TAN number in ITR. The tax department may then issue notices to your employer. (You can find TAN in your Form 16)
- If TDS has been deducted and not deposited, you can file your ITR based on your Form 16. You can mention the employer’s TAN number in ITR. The tax department may then issue notices to your employer.
- If your employer fails to issue Form 16, you can file your income tax return based on your Payslips. Your payslips will have TDS details (if tax has been deducted).
- If you file your ITR even before your employer corrects your Form 16 (in case of any discrepancy), you can ‘revise / rectify’ your tax return based on correct Form 16 and Form 26AS. (Rectification of ITR can be done u/s 154 (1))
You may kindly keep below points in mind to avoid TDS mis-match related issues;
- Provide correct PAN number to your employer.
- Make sure your PAN number has been recorded correctly in your Employer’s database and in your Form-16.
- Try to submit all your investment proofs, expenses receipts (like House rent receipts, medical bills etc.,) details to your employer on time.
- Once in a while, during the FY, cross check the TDS deducted (if any) details with your Form 26AS.
- If you find any discrepancies, inform your Employer and request them to revise your Form 16 immediately.
- Save copies of your Pay slips, Form 16s and Form 26AS for your future reference.
- If you have changed your jobs during the financial year, it is advisable to submit your income from previous employment to your new employer. If you do so, the form 16 which is released by your new employer can have all the required details and TDS will be deducted accordingly. Do note that you need to enter the TDS deducted by your current as well as previous employer in your ITR, and pay taxes (if any).
- In case if TDS is deducted and not deposited, you are advised to file your income tax return based on your payslips and pay taxes. If you receive any tax notice from the IT dept, your employer is liable to pay penalty.
- Always check your Form 26AS before filing your annual income tax return.
Latest News (Post on 25-Oct-2016) : All the Private & Govt Salaried Employees will now receive SMS Alerts informing about the deposit of tax deducted at the end of every quarter. The new step is an effort by the Income Tax Department to directly communicate deposit of tax deducted, through SMS alerts to salaried taxpayers, at the end of every quarter.
In case of a mismatch, they can contact their deductor (Employer) for necessary correction. Simultaneously, SMS alerts will also be sent to deductors who have either failed to deposit taxes deducted or to e-file their TDS returns by the due date.
All taxpayers who wish to receive such SMS alerts are advised to update their mobile numbers in their e-filing account (Income Tax Filing Portal).
I hope this post is informative and useful. Do you receive Form-16 every year? Did you face any ‘non-payment of TDS issues’ from the IT dept? How did you respond to such notices? Kindly share your views. Thank you!
(Post published on : 21-October-2016)