A mismatch between what an employer computes and what an employee claims can drag both under the taxman’s glare.
The Income Tax (I-T) department is using a fine-tooth comb to nab discrepancies in the tax deducted at source, or TDS, by companies and the declarations by its employees in the annual I-T returns. What’s underway is a line-wise reconciliation of the two sets of numbers under different heads – house rent allowance, medical insurance, outgo on home loans, tax saving investments under 80C etc.
Around early December, several companies in Mumbai, Delhi and other big cities have been served notices under Section 133C which was introduced in 2014-15, empowering authorities to call for information to verify details. The companies are being asked to either ‘confirm the information’ or ‘furnish a correction statement’, two persons aware of the exercise told ET.
The aim of the department is to track cases where tax has escaped with either the company deducting less TDS than it should have or employees claiming refunds through extra investment declarations — not stated earlier during the year but later included while finalising the ITRs.
The law puts the responsibility on the employer for correctly computing the TDS of persons it hires and reporting it every quarter. But traditionally, the focus of companies has not been closely verifying the declarations by employees; in some cases employees may not submit the actual documents in time; also, not adequate validation is done by service providers — several of them are software companies — to whom companies typically outsource the payroll work.
Read more at: The Economic Times
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