• Tax on salary not received

This is regarding income tax on salary not received. The co. Has not paid salary of 10 months during the year.also did not provide form 16 to employees. Based on the provisional tax statement the emoloyee has filed his iT return stating full year salary and full tds amount assuming that by the co. Shall deposit TdS and he will rceive salary by the time IT is assessed.However salary was received only for 10 months and no tds was paid by the co.. the co. Also did not provide the form 16 to employees.  Now the IT has issued notice for the unpaid tax amount as co. Has not paid the TdS as it did not pay salary.what is the way out. Employee is ready to pay tax when he recieves the salary. But ita not possibble to pay the amount right now as co.is not paying salary. This is wrt to fy 12 13. Please suggest the best way of replyin to the notice.
Asked 3 years ago in Income Tax from Chandigarh, Chandigarh
You may file a revised return, if it  is legally  possible under, the provisions of Income tax , then return may be revised by claiming loss under the head salary and revising the total income and revising the tax payable. By this revision the tax demanded need not be paid.
Vijay N. Kale
CA, Hyderabad
248 Answers
12 Consultations

4.9 on 5.0

1 -  Revised return can be submitted if it is within the time limits.
2  - If intimation is received with a demand for tax from CPC / ITO, you can file application with the Commissioner for revision u/s 264.
3  - If the notice is issued only for hearing u/s 143(3), you can submit your issues with the Income Tax Officer and file revised computation. 

If TDS has been deducted but not remitted by the employer, you can take up the issue with the TDS officer also. If you are still continuing in the employment, you may have some problems with your employer if you choose this option. You can only then request your employer to remit the tax and issue Form No. 16, so that you will not have any problems.

Salary is assessed on accrual basis and not on receipt basis. Hence, unpaid salary will also be treated as income only.
B Vijaya Kumar
CA, Hyderabad
845 Answers
48 Consultations

5.0 on 5.0

As per Section 15 of the Income Tax Act,1961 clarifies the year of chargeability of salary. Salary is taxable on due or receipt basis which ever is earlier. Salary due in previous year is taxable even if not received.

In the present case, first you mentioned that salary is not received but in fourth line you have mentioned that salary is received. Assuming that salary is not received i give my views as follows
Firstly you should not have filed the return if form 16 is not available. You should have checked online for TDS deduction. But since you have done so :

1. If you have already received notice then you cannot file revise return. 
2. You can approach the concerned IT officer regarding your query and if he gives time then you need to approach the employer and insist him to file TDS returns and see that the TDS is duly reflected in your form 26AS online. Since as per Income Tax Office if the TDS is reflected online in Form 26AS then only they can give credit for the TDS paid.
3. Third option is to pay the tax and try to recover the tax from employer.

Since you have already filed return on due basis your income is taxable.

Shyam Sunder Modani
CA, Hyderabad
1408 Answers
95 Consultations

5.0 on 5.0

The salary is taxable on the on the due basis . So salary will be taxable even if not paid . The question is not clear whether you have not paid for 10 month or any other period . Further what was the terms of appointment . Whether the employment continues or the relation ship of employer -employee exists even after such long non payment .

You have a chance to revise the return at the time of  assessment by disclosing the full facts and giving an undertaking that this income will be offered for tax in the year of receipt , because the  salary which has not been received  can be taxed in the year of receipts . Further please check  form 26AS also for credits . 
Prakash Sinha
CA, New Delhi Area, India
120 Answers
16 Consultations

4.9 on 5.0

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