India’s tax system can be complex, especially when it comes to TDS (Tax Deducted at Source). In this blog, we’ll cover three key scenarios: what to do if your company hasn’t deposited your TDS with the government, whether wedding gifts can attract an income tax notice, and the TDS rules for NRIs purchasing property in India.
1. What to Do if Your Company Hasn’t Deposited Your TDS
If your employer deducts TDS from your salary but fails to submit it to the government, it can create a problematic situation for you as the taxpayer.
Steps to Take:
- Check Form 26 AS: Start by checking your Form 26AS on the Income Tax Department’s website. This form shows the total TDS deposited in your name.
- Contact Your Employer: If the TDS isn’t reflecting, contact your HR or finance department to confirm whether TDS has indeed been deposited.
- File a Complaint: If your employer isn’t cooperative, you can file a complaint with the Income Tax Department, as failure to deposit TDS is a violation of tax law.
- Protect Yourself: Although the liability to deposit TDS lies with the employer, any unpaid TDS can lead to complications in your return filing and tax liabilities.
Potential Consequences
The government may take action against the employer for failing to submit TDS, including penalties and interest. However, in such cases, make sure you document all communication with your employer to safeguard yourself if any issues arise during tax filing.
Can You Receive an Income Tax Notice on Wedding Gifts?
In India, wedding gifts are generally exempt from income tax if they meet certain criteria. Here’s how it works:
Exempt Gifts: Any gifts you receive from close relatives (parents, siblings, grandparents, etc.) are exempt from tax.
Non-Relative Gifts: Gifts from non-relatives are also exempt if they are under INR 50,000. However, if the total value of gifts from non-relatives exceeds this threshold, the amount becomes taxable under the head “Income from Other Sources.”
Important to Remember: While gifts from close relatives are tax-free, you should keep detailed records and proof of the sources of your wedding gifts, as the Income Tax Department can issue a notice if they find any discrepancy or unusually high-value gifts without clear origin.
TDS Rules for NRIs Buying Property in India
For NRIs purchasing property in India, TDS rules vary depending on the value of the property and the residency status of the seller.
When Buying from an NRI: If the seller is also an NRI, the buyer must deduct TDS at 20% on the total sale consideration if it’s a long-term capital gain, or 30% if it’s a short-term capital gain.
When Buying from a Resident Indian: If the seller is a resident, the buyer should deduct TDS at 1% if the property value exceeds INR 50 lakh.
Additional Rules for NRIs:
NRIs can only make property transactions through Non-Resident External (NRE) or Non-Resident Ordinary (NRO) accounts.
The TDS amount should be deposited to the government within seven days of the end of the month in which TDS was deducted.
NRIs should also submit Form 15CA and, in some cases, Form 15CB (certified by a CA) to the Income Tax Department when transferring funds abroad after a property sale.
Conclusion
Managing TDS and understanding your tax obligations in India requires attention to detail, especially if you’re dealing with issues like unsubmitted TDS, wedding gifts, or property purchases as an NRI. Always maintain clear records and consult with a tax expert when necessary to ensure compliance with India’s tax laws and avoid unexpected penalties or notices.
