Tax notices to employees a 'discrepancy', says TCS

Information technology major Tata Consultancy Services (TCS) on Friday termed the tax demand notices received by several of its employees a “discrepancy,” and the tax department will be reprocessing the returns.

"We understand that the tax authorities will be reprocessing the returns, post which TDS shall be in sync with Form 26AS issued by the Income Tax Department, and Form 16 Part A issued by TCS. Associates that received the notice will receive a rectification intimation in due course and are not required to pay any demand amount.

"Once the tax authorities send the rectification intimations, the discrepancies should be resolved,” an internal communication by TCS to its employees reviewed by Business Standard showed.

“Some of the employees have received the demand notice to pay Rs 50,000 to Rs 1 lakh, according to the seniority, which looks like a technical glitch at the company's end that may have led to non-updation in TDS claims on the IT department portal,” said one of the employees.

The company added, “Associates that received the notice will receive a rectification intimation in due course and are not required to pay any demand amount.

"Once the tax authorities send the rectification intimations, the discrepancies should be resolved.”

The communication team at TCS said that they would not comment on this matter.

“Further to our communication yesterday regarding tax demand notices received by many associates from the Income Tax Department, we have received clarification from the tax authorities,” TCS said.

“Because the company failed to deposit the TDS, the Income Tax Department has approached the employees.

"It seems unlikely that a major company like TCS would have issues with TDS deposits, given their strong compliance record.

"A similar situation occurred with an edtech company during a period of financial trouble, where employees received TDS notices.

"However, this issue did not arise with TCS. It’s possible that the delay in TDS deposits could have been from TCS’s side, but it seems more likely to be a technical error,” said a senior partner at a major consultancy firm who wished to remain anonymous.

Abhishek Raja Ram, senior partner at Abhishek Raja and Associates, said, “The Income Tax Department should have been more cautious before issuing notices based on technical glitches.

"Receiving an Income Tax Notice due to such issues can cause significant mental stress and harassment for salaried employees.

"The department should exercise greater care when issuing notices to employees of a single company.”