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Journalism of Courage
You thought electronic filings of withholding tax returns will make things easier? Think again. Over the past few months,many employers have received notices from the income tax department relating to errors in the quarterly withholding tax returns (Form 24Q) filed by them. Such notices are followed by demand orders asking such employers to pay up taxes or pay the interest for delay in deposit of taxes.
An employer is required to withhold tax on payment of salary and deposit the tax withheld in a particular month with the government treasury by the 7th of the following month. Thereafter,the employer is required to file Form 24Q quarterly,wherein employee-wise break-up of taxes withheld and deposited is reported. An employee will get credit for taxes withheld by the employer only when the withholding tax return in Form 24Q is filed by the employer. If the form is not filed or there are errors in the same,the employees from whom tax is withheld by the employer will not receive credit for the taxes withheld from the income tax department.
This results in a twofold problem: One for the employer who has withheld tax from the employee and the other for such employee from whom tax is withheld by the employer. The employer will receive a notice from the income tax department requiring it to either revise Form 24Q within 15 days or deposit the tax payable along with interest. It had been seen that such notices are generally followed by demand orders requiring employers to deposit the tax due. The employee could also receive notice from the IT department for making good the shortfall in tax. Such demand is a consequence of taxes payable not matching with the taxes deposited.
To mitigate this hardship for both the employer and the employee,it is essential that taxes be withheld and deposited within the prescribed date. Also,details of income,taxes withheld,permanent account number (PAN) of the employee and tax challan details should be correctly filled in Form 24Q to ensure that the reporting is accurate and it gets correctly captured in the income tax departments records.
Form 26AS is a statement that shows details of tax withheld and deposited by various payers of income and can be downloaded by the employee from the income tax departments website. Employees should download Form 26AS from the website and ensure that full credit of tax withheld by their employers is reported in the said form. In case of any discrepancy,they should ask their employers to recheck the Form 24Q filed by them and file correction statements,if required. In case notice is issued by the income tax department to the employer,the employer should immediately review the Form 24Q filed earlier.
The writer is tax partner,E&Y
