TCS Employees Face Income Tax Demands Due to TDS Discrepancies

Thousands of Tata Consultancy Services (TCS) employees have been issued demand notices by the Income Tax Department due to discrepancies in their tax deducted at source (TDS) claims. Between 30,000 and 40,000 employees received these notices, with tax demands ranging from Rs 50,000 to over Rs 1 lakh, depending on their seniority. The issue is believed to have arisen from a software error that caused TDS claims to be improperly updated on the income-tax portal, leading to mismatches between employees’ records and the tax department’s data.

The notices, sent out on September 9 under Section 143(1) of the Income Tax Act, indicated that the department had no record of full payments made by employees for the March quarter of FY24. This discrepancy led to concerns among employees, as refunds were withheld due to the incorrect TDS updates. TCS has since communicated internally, advising employees not to take any action on the demands and assuring them that the issue is being addressed. The company informed employees that tax authorities have clarified that the tax returns will be reprocessed, aligning the TDS information with Form 26AS and Form 16 Part A.

TCS has been actively working to resolve the issue and has notified the tax authorities to ensure a swift resolution. The incident comes at a time when TCS is witnessing a resurgence in its workforce numbers, adding 25,000 employees in the first quarter of FY25 after several quarters of decline.

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