False Salary Credit And Tax Returns Filed By Company After Quitting

I joined a company a few months back and had to leave it abruptly because the kind of job profile offered was very different from the kind of role promised. Further, there was no proper HR or redressal mechanism as most of the HRs were located in different offices, and I was not comfortable with the environment there. I discussed with my manager at that time and with his agreement, I sent him an email and stopped coming to work as it made no sense, and I was kept without work for a long time. I also sent back the badge and laptop to the company and received acknowledgements for the same.

The HR called me after a week and threatened me with legal action for not serving the notice period of one month according to the offer letter. I had not received my salary for the duration of my stay there (about 20 days), and I was not keen on the salary either. But they only kept talking about legal action if I don't pay up, etc.

Recently, after about 6 months while filing my IT returns, I noticed that my Form 26AS showed a credit of a large amount as salary and also tax credited to the Income Tax Department from my PAN account. The situation here is I had not received any money from the company as salary, and hence it shows a false statement. And further, if I were to consider the salary, I would end up paying a large amount as Income tax since it would then fall in a different tax bracket.

When I asked the company about this, they again started their legal threatening drama and asked me to pay a very large amount as notice pay.

Can you please suggest what action I can take against this company concerning the following points:

a) Salary not paid

b) False tax credit

Can I now claim the salary amount for my period of stay there so that I can file my IT returns and corrections properly? I feel the IT Department would ask me about this, and I would have to provide evidence for the amount not paid, and I would prefer to avoid that hassle.

If it comes to the worst situation, and I had to pay the notice amount. What would the amount include? Is it just Basic pay Or Basic + other components?

Please suggest accordingly and thanks for your time.

In India, no agreement can be made on human lives. So, companies don't ask to pay notice pay. However, incorrect tax credits can only be proven if you received the salary on which more credit was to be made. To get additional salary, you should contact a legal advisor expert in contract laws.

My online Form 26AS shows an entry of Rs X and Rs Y as tax paid by the company. I feel the company is trying to evade tax or something of that sort. I am mainly concerned about future tax implications because of the wrong declaration by the company. Because of the false declaration of salary paid by the company, I might be questioned by the IT Department and then I would have to try and prove that I did not receive the said amount of Rs. X. I would like to pre-emptively avoid this and also try to get my dues.

If the company has shown that the amount of x was paid, then you are at an advantage to claim your dues. You should have received the x amount in your bank account. If not, then send a notice to the company for the balance money.

Kindly provide the following details.

1. As you have mentioned that you worked for only 20 days, was there any probationary period mentioned in your appointment letter? If yes, for how much duration? Normally, companies do not keep a clause of serving notice period or paying for notice salary during the probationary period.

2. If there is no probationary period and you were confirmed as a permanent employee on the day of joining itself, what is the duration of the notice period mentioned in the appointment letter? If there is any clause of a notice period, then you will need to pay for the notice period as you have not served the required duration of the notice period.

3. As for the wrong credit in Form 26AS, ask your company to get the return rectified.

Hi @gurushree,

Probationary period mentioned was for 6 months. They have not mentioned anything specific about the notice period during the probationary period, but there is a generic resignation clause which says that they can approach any Court to recover all costs, damages, losses, and expenses incurred by the Company if the notice period is not served out. It doesn't mention anything about the actual notice amount in terms of salary. And I don't know how they have substantiated a very large amount as the notice amount.

Earlier, they had asked me to approach them and pay the amount. What is the default notice period amount in most cases? Is it Basic only or Basic + other components. The company has not paid any heed to getting the return rectified and only keeps playing tactics around the notice period.

Your post is unclear. How long did you work there? How much was your salary? What was the notice period? How much is the credit and salary showing up in your 26AS? Without this, no one can give the correct answer.

In general, the company would pay TDS on any provision they have made. In that case, it would appear in your 26AS. However, the income tax department will insist you include the income in your returns. There are provisions that allow you to file an application to the income tax officer asking to remove it from your tax statement. Ask your CA for the procedure.

Dear Sidewinder78,

What you have stated is a recent phenomenon. I have come across many such cases of wrong entries in Form 26AS and statements from TRACES. Either the company is doing it willfully or out of ignorance or carelessness. These cases pertain only to people who have left the companies.

Since these reports to the IT department are system-generated, the data based on Annual Income appears in Form 26AS on TRACES when an individual accesses it after the end of the Financial Year (i.e., in the Assessment Year). It seems the data in the Payroll software is not updated with the event of cessation or termination of services of the employee, and the software continues to carry the old salary data until the end of the Financial Year.

Unfortunately, there is no standard remedy provided for such cases. I think some solution will be provided by the Income Tax authorities once a sufficient number of representations reach them.

Warm regards.

@Saswatabanerjee

I was there only for 20 days, and the notice period was 1 month. I feel it may not be appropriate to reveal financial details.

@Raj Kumar Hansdah: Thanks for your valuable input. Is there any proactive step I can take to remove the income from my Form 26AS, for example, writing a letter to the Income Tax Department or sending a legal notice to the company? I am assuming the IT Department might ask me to prove that there is no income paid, for which I might have to do some running around and provide bank statements, etc.

Thanks

Dear Sidewinder,

I think one of the options available for you is to file a correct Revised IT return. If you have already done this, then you can wait for your refund. If there is a verification, then you can reply with the relevant facts based on documents.

On the other hand, you may also send a notice to the company through a legal advisor/tax consultant/ C.A. or bring this matter to the relevant Income tax circle.

Warm regards.

Raj,

At the end of the financial year, all companies are required to make provisions for outstanding liabilities (even if they turn out to be not payable later). Once the provision is made, the company is required to pay TDS on the same and credit the TDS to the account of the concerned person.

There is nothing wrong in that respect by the company, and sending a notice is of no meaning. They had provisioned for it, they have paid the tax and given proper credit. That they later decided not to pay is a different matter and can be taken up by courts, but the credit given and shown in 26AS will not change.