TDS Returns for Salary – Quarter 4

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Owing to pay salary to an employee the employer deducts a certain amount of TDS from salary of that employee u/s 192. The employer should file TDS return on salary in form 24Q. This form should be submitted on quarterly basis. Required details of salary paid to the employees and amount of TDS deducted on such payment is to be provided in Form 24Q.

Form 24Q includes 2 annexures – Annexure I and Annexure II.

Annexure I should be submitted for all four quarters of a financial year, Annexure II is not required to be submitted for first three quarters. Annexure II should be submitted in the last quarter (January-March) only.

TDS on salary payment should be deducted as far as the income tax slab is concerned. The employer has to consider all deductions and investments of the employee if evidences of such investments are provided.

Annexure I : This annexure reflects deductee wise break-up of TDS against each challan.

Details of challans to be provided in Annexure I

i)   BSR code of branch
ii)  Date of deposition of challan
iii) Challan serial number
iv) Total Amount in challan
v)  TDS amount to be assigned among deductees
vi)  Interest amount to be assigned among deductees

Details of deductees to be provided in Annexure I

i)    Employee reference number (if available)
ii)   PAN of the employee
iii)  Name of the employee
iv)  TDS section code
v)   Date of payment
vi)  Amount paid
vii) TDS amount
viii) Education Cess

Also, if the employer doesn’t deduct TDS or deducts at low rate, he will have to mention the reasons for non-deduction or lower deduction.

TDS Section code related to Form 24Q

192A – Salary paid to govt. employees other than central govt. employees
192B – Salary paid to non-govt. employees
192C – Salary paid to central govt. employees

Annexure II : This annexure reflects a total break-up of the salary, any deductions to be claimed by the employee, his income from other sources, house property and overall tax liability as calculated.


Order of High Court of Gujarat – 24th September, 2018

High Court of Gujarat in case of Devarsh Pravinbhai Patel v/s Asst Commissioner Of Income Tax has held that

TDS credit has to be provided by Income-tax authorities to the deductee even if TDS is not deposited by the deductor.

If employer deducted TDS on salary payments made to the assessee and did not deposit that TDS amount with the credit of Central Government, the department could not refuse the advantage of TDS by the employer of the assessee and credit of such tax will be given to the assessee for the respective years.

Assessee was an individual who was employed as a pilot. During this period, the employer deducted TDS on salary payments made to the assessee. The employer did not deposit such tax with the credit of Central Government. In this issue, the question was that can the department recover such amount from the assessee or whether the assessee was right in asserting that he had suffered the deduction of tax, the fact that the assesee did not deposit such tax with the credit of Central Government could not allow the Income Tax Department to recover such amount from assessee.

High Court of Gujarat held that, under the circumstances, by allowing the petitions the department could not refuse the advantage of TDS by the employer of the petitioner during the relevant financial years. The credit of such tax will be given to the assessee for the respective years. If there has been any adjustment out of the refunds of the later years, the same will be returned to the petitioner with statutory interest attracted.


Interest Liability for TDS Assessee-in-Default

A TAN holder who fails to deduct whole or any part of the tax at source is treated as an assessee-in-default. But, as per provision in section 201 the TAN holder who fails to deduct the whole or any part of the tax on the payment made to a payee shall not be considered  to be an assessee-in-default in respect of tax not deducted by him, if the following conditions are satisfied:

  • Payee has furnished his return of income under section 139
  • Payee has taken into account the above income in its return of income
  • Payee has paid the taxes due on the income declared in such return of income
  • Payee furnishes a certificate to this effect from an accountant in Form No. 26A

In other words, in case of non deduction of tax at source or short deduction of tax,  if all the discussed conditions are satisfied, then the payer will not be treated as an assessee-in-default. However, in such a case, even if the payer is not treated as an assessee-in-default, he will be liable to pay interest under section 201(1A). In this case, interest shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident payee. Interest in such a case will be levied at 1% for every month or part of the month.


Non-Deduction of TDS owing to bonafide belief by Deductor – Judgement/Order

Ms Karnataka Power Transmission Corpn. Ltd. Vs ITO (OSD) (TDS) (ITAT Bangalore)


Karnataka Power Transmission Corporation Ltd. paid cash equivalent of unutilized leave at the time of retirement of their employees, however, they didn’t deducted TDS on the same. As per section 10(10AA), in case of payment towards unutilized leave period, entire payment is exempted in case of Central or State Government employee and payment up to INR 3 Lakhs is exempt in any other case.

Proceeding was initiated against KPTCL u/s 201 and 201(1A) with an allegation that KPTCL was bound to deduct TDS on salaries paid to their employees by including the payment received by an employee in respect of any leave period not availed by the employee. Department contended that KPTCL is not State Government, but is a statutory corporation and therefore are required to deduct TDS above INR 3 Lakhs.

KPTCL submitted that its employees were employees of the State Government and therefore entire payment towards unutilized leave period was exempted.


On the basis of KPTCL formation, KPTCL action in past several years and the manner of exercise of control and affording protection to employee of KPTCL by the State Government, KPTCL bonafidely believed its employees to be State Government employees and likewise assumed that the entire payment towards unutilized leave encashment to be exempt. Such bonafide belief for non-deduction of TDS is admissible in law.

Section 192 uses the word ‘estimate’ and therefore the statutory intention is that it should be an approximation. The liability of the employees for payment of taxes is primary liability and the liability of KPTCL is only vicarious liability and recovery of taxes through TDS is only a mode of collection of taxes. The revenue always has the option and the right to collect taxes from employees concerned.

Click here to Download Judgement/Order