Employee Deposited Advance TDS: How Should We Reflect This in Tax Returns?

Hello everyone, one of our employees has deposited advance TDS for Q1 and Q2 of this current FY and asked not to deduct TDS from the salary. As per my TDS calculations, it has been regularly accumulated every subsequent month. How can we show this TDS amount in the return, and is it the right way to handle it? Please advise.

Handling Employee-Deposited Advance TDS in India

In the scenario where an employee has voluntarily deposited advance TDS for Q1 and Q2 of the current financial year and requested no deduction from their salary, it's crucial to ensure compliance with tax regulations while addressing the employee's request. Here's a practical guide on how to handle and reflect this situation in the return:

1. Verification and Documentation:
- Verify the employee's request in writing and maintain clear documentation of the advance TDS deposits made by the employee for Q1 and Q2.

2. Consultation with Tax Experts:
- Seek advice from tax experts or consultants to ensure accurate handling of the advance TDS and compliance with Indian tax laws.

3. Adjustment in TDS Return:
- While filing the TDS return for the respective quarters, adjust the TDS amount deposited by the employee against the total TDS liability for those quarters.

4. Reporting in Form 26AS:
- Ensure that the advance TDS deposited by the employee is reflected in the employee's Form 26AS to avoid any discrepancies during tax assessments.

5. Employee Communication:
- Communicate transparently with the employee regarding the adjustment made in the TDS return and provide them with the necessary documentation for their records.

6. Compliance Check:
- Regularly review and reconcile the TDS amounts deposited by the employee with the actual TDS liabilities to maintain compliance and accuracy.

7. Future Considerations:
- Establish clear policies and procedures for handling such instances in the future to streamline the process and ensure consistent compliance.

By following these steps, you can appropriately handle the situation where an employee has deposited advance TDS and reflect it accurately in the TDS return while maintaining compliance with Indian tax laws.