Employers failing to pay the Government the tax deducted at source (TDS) on salaries of their employees can be jailed for up to seven years, the CBDT has said.
Failure to deduct income tax on salaries of employees or defaulting in payment of the same to the government will be liable to a penalty of an equivalent amount, the CBDT said while notifying annual circular for TDS on salary for FY 2015-16.
“Section 276B lays down that if a person fails to pay to the credit of the Central Government within the prescribed time, as above, the tax deducted at source by him or tax payable by him… he shall be punishable with rigorous imprisonment for a term which shall be between 3 months and 7 years, along with fine,” it said.
Besides, interest will also have to be paid before furnishing of quarterly statement of TDS for respective quarter, it added. The circular detailed the time line for deduction of TDS as well as its credit to the government for various categories of employers.
“If any person fails to deduct whole or any part of tax at source or fails to pay the whole or part of tax…, he shall be liable to pay, by way of penalty, a sum equal to the amount of tax not deducted or paid by him,” it said. The circular also contains the Income Tax rate under various slabs as well as the surcharge of 12 per cent on individuals earning Rs 1 crore and above. It also detailed procedure for valuation of perquisites and the tax thereon.
The circular also notified 2 per cent Education Cess on Income Tax and another 1 per cent secondary and higher education cess. It also detailed method of payment of tax on perquisites by employer and calculation of income when salary is received from more than one employer.