Drawing from the recent High Court judgment (https://timesofindia.indiatimes.com/india/delhi-hc-backs-employees-in-tds-deposit-case/articleshow/114704352.cms), Easitax aims to outline employees' rights concerning TDS deductions on salary. We would like to list specific actions employees can take to ensure compliance and clarity on their deductions.

As per the TOI article (dated 29-10-2024) in the recent judgment of Delhi High Court in TDS deposit cases supports employees. The facts of the case relate to a Kingfisher Airlines pilot who received a notice of demand for tax which it is well known were deducted by his employer but not remitted. The court also dismissed the case in favor of the employee as employees do not have responsibility to pay for taxes which are deducted by employers. The authorities also provided that it required the tax authorities under the directions of the court to withdraw the impugned demands and refund any amounts due.

In other words, I want to make it clear that if your employer has been deducting TDS from your salary and has not deposited in the government as required, then prepare to face the music but the law will not be after you for those taxes. TDS deducted by your employer is to be deposited with the government and not you.

Here are some precautions you can take as an employee to avoid such situations and what to do if you find your TDS has not been deposited:

1. Documents to Look for TDS Compliance

• Form 16/16A: This form shows an amount of tax deducted from an employee’s income and amounts deposited by the employer. It means any mismatch between the TDS reflected in Form 16 and the TDS actually deposited must be a concern.
• Payslips: These gives deduction breakup for every month that includes TTD. The above amounts should correspond to figures in the Form 16A as well as the annual salary.
• Bank Statements: Many a time, net salary tallies with the payslip only after the TDS deductions and hence one should cross check the bank deposits. Variance here may indicate deduction not recorded.

2. What to Do When TDS Is Not Paid

If, after checking these documents, an employee suspects that their TDS was not deposited, the following actions can help resolve the issue:

• Contact the Employer Directly: Employees should inform the employer first and clearly state that there was a problem, they would like it fixed promptly. It might just need a gentle reminder to solve the problem on the spot.
• Send a Formal Written Complaint: In case of failure; the employees are encouraged to write a formal complaint to their employer to clarify the difference in TDS. It is strong evidence that the employee concerned lodged the complaint and in case of further legal action.
• Use the TRACES Portal: An employee can even file a complaint through the TRACES TDS Reconciliation, Analysis, and Correction Enabling System. Here’s how:

1. Go to the TRACES website: TRACES Portal.
2. Go to “Request for Resolution” to report mismatched TDS or where TDS details are missing.
3. Refiling a grievance here makes the Income-tax Department to ask the employer and compel them to rectify the problem.

3. Report the matter to the TDS Assessing Officer

In the event the employer also does not deposit TDS, the employees have the right to approach the TDS Assessing Officer in their region. Documents can be attached in writing describing the default, Form 16A, bank statements, and payslip. This can urge the employer to deal with the problem since there has been a step up in the legal process.

4. Legal Remedies And Employee Rights

The recent Delhi High Court decision shows that employee should not be made to suffer for default committed by the employers in depositing TDS. Employees can rely on the following protections:

• No Double Taxation for Employees: They should not have to pay for TDS not just once but for twice. The file returns involve the employer and they are solely responsible for depositing the TDS.
• Income-Tax Department Intervention: If complains are made these employers can be eligible to penalties or other actions towards them by the Income-tax Department regarding the actions.
• Legal Proceedings: What the Delhi High Court has inferred is that employees can even have a legal cause of action if they suffer a loss financially because the employer has not deposited TDS. At worst, the employees could go to court.

This is a more formal step, and it should only be taken if your employer has not responded to your other attempts to resolve the issue.

5. Preventure Control Measures for Employees

To safeguard against future issues, employees should:

• Regularly Verify TDS Status: Through the Income-tax Department’s website, one can find Form 26AS as a tool that will help the employee to track down all the records of TDS to be sure that everything has been properly deducted.
• Maintain Copies of Financial Records: For tax verification and correction of entries and discrepancies saves payslip, bank statements and Form 16/16A for three to five years.
• File Returns on Time: Filing of tax returns at the right time assists them deal with TDS challenges in case they occur and when they are still small.

Conclusion:

TDS is usually deducted by the employer from the employee’s wages, failing which the employee should know his/her rights to avoid losing money. The Delhi High Court decision further strengthen the employer’s absolute liability for depositing the TDS once deducted. In that case, using the above steps, employees will be able to act and avoid such situations for further tax compliances and charges which are not deserved.