Recovery of taxable income pertaining to previous year

[SANJIV KOTHARI]

Assessee has received certain emoluments in previous years as well as current year. Employer has deducted TDS on emoluments paid to assessee. Now employer has noticed that emplument paid was wrong and he want to recover the empluments so paid in previous years as well as current year.

Assessee ask that recovery can be made out of emoluments due for the year and tax for the current year should be deducted net of recovery. Employer is of the view that tax would be calculated on annual emoluments due and recovery shall be made of gross amount hence tax earlier deducted would be credited to employee.

Let us know what is the correct law position of TDS in such case.

Regards

Sanjiv

[DR.MARIAPPAN GOVINDARAJAN]

The views of the assessee are correct. If there is any excess payment of the previous years such amount may be deducted in the current year's income and tax may be calculated at the net amount.

AI Summary

Recovery of prior-year emoluments may be adjusted against current-year income, with tax withheld on the net amount.
Recovered emoluments erroneously paid in prior years may be deducted from the employee's current-year income, and tax for the current year should be computed on the net amount after such deduction, with TDS determined accordingly.