CBDT Issues Demand Notices to TCS Employees Over Alleged TDS Claim Discrepancies

A demand notice has been received before various TCS employees from the income tax department for the alleged discrepancies in their tax deduction at source (TDS) claims.

The IT giant TCS has asked its employees to wait for additional instructions before paying the sought amount. Between Rs. 50000 to Rs. 1.5 lakh, the tax demand varies.

The associates that have provided with the notice would obtain a rectification intimation within time are not needed to pay any asked amount. The discrepancies must get solved once the tax authorities send the rectification intimations, the TCS Mumbai headquarters said to its employees through an internal mail.

Sources indicated that there may have been an error made by the authorities in handling the submitted returns, noting that the assessing officer has the authority to revise the notice.

In the correspondence, the company mentioned that tax authorities will review the returns again, after which the TDS will align with Form 26AS issued by the department and Form 16A provided by TCS.

Form 26AS provides a summary of TDS/TCS amounts that have been deducted from a taxpayer’s income, along with the tax paid, whereas Form 16A, issued by the employer, includes all TDS amounts deposited with the Income Tax department.

TCS stated in a separate email that dissatisfied employees can consult their tax advisors or contact the company for assistance.

The department can do the rectification in two ways under section 154(2) of the I-T Act. First, by its motion, and second, by an application made by a taxpayer or the tax deductor.

It is thought that the tax collector (TCS) has addressed the issue with the relevant authorities, and the returns are currently being re-evaluated.

Following the rectification, TCS employees who received notifications regarding tax demands should be on the lookout for a ‘rectification order’ u/s 154, detailing the reasons for the original error.

Experts suggested that the problem could be addressed without any action from employees, as the department may voluntarily retract the demand notices.

If not corrected, they can submit a reprocessing request via the income tax filing portal a month later.

Experts indicated that the error is evident in the records and the tax authorities’ suggested correction.

If this rectification lessens the tax refund or surges the tax obligation of the taxpayer then the income tax authority would required to furnish a chance for the taxpayer to hear his stand.

Notices Issued for TDS Mismatch

Often the TDS mismatch notices are automated sent when there is a difference between the TDS amount claimed in the returns and the shown amount in AIS/Form 26AS.

The IT department shall quash the notices if the error is from the Central Processing Centre (CPC), which is responsible for all primary assessments.

TDS deduction and TDS return filing is the obligation of the employer which in this matter is with the Tata Group company.

Over the years, multiple courts have ruled that if an employer withholds TDS but fails to deposit it with the IT department, the demand for the shortfall in TDS payment should not be sent to employees. Instead, the department should pursue the employers for the unremitted TDS amounts.