TDS Discrepancies Leading to Tax Demand Notices: A Guide for TCS Employees
Recently, several employees at Tata Consultancy Services (TCS) have received tax demand notices from the income tax department. These notices, which range from ₹50,000 to ₹1.5 lakh, have been issued due to alleged discrepancies in their Tax Deducted at Source (TDS) claims. However, TCS has advised its employees not to take immediate action and to wait for further instructions. This blog breaks down the situation and provides insights on how employees should proceed.
What Caused the TDS Discrepancies?
One possible cause for these notices is a TDS mismatch. This occurs when the amount of TDS claimed by an employee does not match the records reflected in Form 26AS, which serves as the taxpayer’s official TDS record. Discrepancies often arise due to errors made by employers or the tax authorities during the filing and processing of tax returns. In this case, experts suggest that the mismatch could be due to an error in processing the returns, which led to automated tax demand notices.
TCS’s Response and Guidance
TCS has reassured its employees that the income tax department may rectify the issue automatically and is working closely with authorities to resolve the discrepancies. Employees have been advised not to pay the demanded amount immediately and instead await further instructions. TCS has stated that it expects the department to revisit the filed returns and issue rectification notices, removing the tax liability if a mistake is confirmed.
Legal Provision: Rectification Under Section 154(2)
Under Section 154(2) of the Income Tax Act, rectifications of mistakes apparent from the record can be carried out either by the income tax department or by the tax deductor (TCS in this case). If the issue persists, employees have the right to file a rectification request through the income tax portal, which would trigger a reprocessing of their returns. This provision allows for the correction of errors without the need for any undue payment on the employee’s part.
What Employees Should Do
While no immediate action is required, employees are encouraged to monitor their tax situation closely and consult with their tax advisors if necessary. TCS has provided internal guidance and is ready to assist employees throughout the process. If the issue remains unresolved for an extended period, employees can opt to file a reprocessing request on the income tax portal. It is essential to retain records of Form 26AS and TDS certificates to substantiate claims in case further clarification is required.
The TDS Mismatch Scenario
In cases where there is a mismatch between the TDS claimed and the Central Processing Centre’s (CPC) records, tax demand notices are often automated. However, courts have ruled that the onus of depositing TDS lies with the employer. If TCS has deducted TDS but failed to deposit it correctly, the responsibility for correcting the mistake would fall on the company, not the employee.
Conclusion: How TCS Will Help Resolve the Issue
TCS is actively working to resolve the tax demand notices and rectify any discrepancies in the TDS claims of its employees. The company is liaising with the tax authorities to ensure that the issue is corrected, and employees are not left bearing any additional tax liabilities due to mismatches. Employees are advised to stay patient and consult with tax professionals if they need further clarification on the matter.