The income-tax department has issued demand notices to several employees of Tata Consultancy Services (TCS). The notice alleges discrepancies in their tax deduction at source (TDS) claims. The tax demand reportedly ranges from Rs 50,000 to Rs 1.5 lakh.
In response, TCS has advised employees to wait for further instructions before making any payments. The company has informed employees that the discrepancies should be resolved once the tax authorities send rectification intimations, and that those who received notices are not required to pay any amounts until further notice. There are indications that the authorities may have made errors while processing the filed returns, with the assessing officer having the authority to amend the notices.
The company has communicated internally that the tax authorities will reprocess the returns to ensure that TDS amounts align with Form 26AS, which shows the total TDS deducted, and Form 16A, which records the TDS deposited with the income tax department by TCS. Employees are also encouraged to seek advice from their tax advisers or consult with the company for further guidance.
The income tax department can rectify errors in two ways: on its own or upon receiving a request from the taxpayer or tax deductor, according to Section 154(2) of the Income Tax Act. In this case, TCS has already approached the authorities to resolve the matter, and the reprocessing of the returns is underway.
Experts suggest that the issue may be resolved without requiring any action from the employees if the department withdraws the demand notices on its own. However, if the rectification is not done, employees may have the option to request a reprocessing of their returns through the income tax filing portal after a month.
TDS mismatch notices are often automatically generated when there is a difference between the TDS amount claimed in the tax returns and the amount recorded by the tax authorities. If the Central Processing Centre (CPC), responsible for initial assessments, finds an error, the department may cancel the notices.
