Kerala High Court Reaffirms Employer Liability for TDS Defaults; Aditya Bhattachrya Highlights Statutory Consequences

The Kerala High Court has reiterated a critical principle under India’s income tax framework, an employee’s income tax liability is not waived merely because the employer fails to deduct or remit Tax Deducted at Source (TDS). The ruling underscores the strict statutory obligations placed on employers under the Income-tax Act, 1961, particularly in relation to salary payments.

Commenting on the implications of the judgment in an article published by Outlook Money, Aditya Bhattachrya emphasised the serious legal and financial consequences that arise from non-compliance with TDS provisions. He noted that failure to deduct or deposit TDS on salaries, as mandated under Section 192, exposes employers to significant statutory action. Such defaults result in the employer being classified as an “assessee in default” under Section 201 of the Act.

Aditya further explained that this classification is not merely technical in nature but carries tangible repercussions, including mandatory interest liabilities, penalties equivalent to the unpaid tax, and potential disallowance of related business expenditure. His remarks bring into sharp focus the compliance risks businesses face when TDS obligations are overlooked or inadequately implemented.

Visit Article: https://www.outlookmoney.com/tax/selling-gold-or-silver-how-tax-rules-change-by-holding-period