Assessee Not Responsible For Ensuring TDS Is Paid To The Government: Delhi HC
Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator. Author of Cyber Scams in India, Digital Arrest, The Money Trap and The Human Hack
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By Sunil Garodia
First publised on 2024-10-29 11:37:36
About the Author
Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator. Author of Cyber Scams in India, Digital Arrest, The Money Trap and The Human Hack
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Wrong Approach
The approach taken by tax authorities to recover Income Tax dues has become deeply troubling, especially when they ignore established laws and regulations by pursuing dues from the wrong parties. When tax is deducted at source from an employee's salary, the responsibility for paying that tax to the government rests solely with the employer. As per Section 205 of the Income Tax Act, once tax has been deducted from an individual's salary (or any other mandatory source), the taxpayer cannot be asked to pay the tax again unless there is a shortfall in the overall tax assessed on their total income.
Delhi HC To The Rescue
In a recent case, the Delhi High Court rightly ruled that a demand notice issued by the Income Tax department to a former pilot of the defunct Kingfisher Airlines had no legal foundation and should be rescinded. Since Kingfisher Airlines deducted the tax from the pilot's salary, it was the company's duty - not the pilot's - to remit it to the government. If the company failed to do so, the tax authorities should address the company directly to recover the dues, as the tax obligation on the pilot was already discharged at the time of deduction.
Bar Under Sec 205 Of I-T Act
The Tax Deducted at Source (TDS) mechanism was established to ensure tax is collected from income at the point it becomes due. This system serves two primary purposes: to compel the reporting of income and to guarantee that tax is recovered at source. Under the law, it is the duty of the income provider to deduct TDS and deposit it with the government, using the payee's PAN. Once TDS has been deducted, the taxpayer has no further responsibility for remitting that tax to the government. Sec 205 of the I-T Act bars the I-T authorities from calling upon the assessee to pay the tax himself to the extent to which tax has been deducted from that income. In fact, if there is any refund that has to be claimed, the taxpayer becomes an aggrieved party because if the company does not remit the tax to the I-T department, they will not process the refund.
Stop Harassing The Taxpayers
By issuing notices demanding tax from individuals who have already had it deducted from their income, the Income Tax department is effectively asking them to pay twice on the same income - a violation of legal principles. The department should instead focus on holding accountable those companies that deduct TDS but fail to deposit it. Such misdirected recovery efforts constitute undue harassment of taxpayers and must come to an end.
