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

AI Summary

Employer Overpayment Recovery: Deduct Past Excess from Current Income, Calculate Tax on Net Amount, Crediting Past TDS An individual inquired about the correct tax treatment when an employer seeks to recover overpaid emoluments from previous and current years, which had tax deducted at source (TDS). The employer believes tax should be calculated on the gross annual emoluments, with recovery from the gross amount and crediting past deducted tax to the employee. The response indicated that the individual's view is correct: excess payments from previous years should be deducted from the current year's income, and tax should be calculated on the net amount.