Opinion Of Eminent Legal Luminaries On Controversial Issues

Whose Duty To Deduct Tax From Salary?

QUERY: By mistake deduction of tax at source has been made at wrong rate / lower rate / due to omission in the calculation of surcharge / education cess. While filing return of income, the employee pays the differential amount as self assessment tax. Subsequently on TDS assessment, demand is raised on the employer for the same differential amount. Employer proposes to recover the said amount from the employee. Is the employer justified in doing so or is there any remedy available to the employer?
ANSWER: – Basic duty to pay the tax is of the employee, however, as a vicarious liability, the employer has to deduct the tax. So, if the employee has paid the difference; no tax could be recovered from the employer. S. 191 plus other decisions support this view.

– However, interest u/s. 201 can be charged from the date from which TDS was deductible to the date of payment by the employee on short deduction of TDS
[See Hindustan Coca Cola Beverage (P) Ltd. 293 ITR 226(SC)]

Posted in Income-tax

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