While it is the responsibility of the employer to undertake to withhold and deposit the taxes with the tax authorities in a timely manner, in case where the employer has not deposited the TDS, appropriate credit for the same would not reflect in your Form 26AS
I used to work at an AMC and resigned towards the end of FY20. When I went to my CA to file my returns for FY20, I came to know that the tax deducted from the salary slips has not been deposited by my employer with the tax department. Also, the employer has refused to issue a Form 16 before the tax-filing deadline due to the same reason. Further, even the PF deducted in the salary slips has not been deposited in my PF account. My question is, whose liability is it if the tax is deducted by the employer from the salary but not deposited to the tax department? What redressal do I have in this situation to get the employer to deposit the tax deducted from the salary? Will I be tagged as a defaulter if my employer does not deposit the tax? What is the legal stand on this? Also, how do I get my employer to deposit my PF already deducted from my salary into my PF account?
While it is the responsibility of the employer to undertake to withhold and deposit the taxes with the tax authorities in a timely manner, in case where the employer has not deposited the TDS, appropriate credit for the same would not reflect in your Form 26AS. Consequently, the tax authorities, while processing your tax return, may raise a tax demand. You would then need to submit necessary supporting documents (payslips, bank statements where salary credited, employment contract, etc.,) and request the tax officer to grant the TDS credit.
It would also be advisable to record communications regarding the non-deposit of TDS between you and your employer in a formal communication. Please note that there are provisions in law (Section 205 of the I-T Act, 1961), whereby if tax is deductible at source, the assessee shall not be called upon to pay the tax himself to the extent to which tax has been deducted from that income. There are also various judicial precedents which state that the tax department should not deny the benefit of tax genuinely deducted at source by the employer of the taxpayer and the credit of such tax deducted would be given to the taxpayer for the respective year.
It may, however, be noted that litigation cannot be ruled out, especially at lower levels.
It would also be advisable to record the communications regarding the non-deposit of provident fund (PF) contributions between you and your employer in writing.
If, despite your repeated reminders and complaints, the employer does not address the issue, you may consider approaching the jurisdictional Employees’ Provident Fund Office (EPFO) post discussion with a labour lawyer.
At an appropriate time, depending upon the facts and circumstances, legal advice may be evaluated.