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CS Executive · Tax Laws and Practice · Direct Tax at a Glance

Under the Income-tax Act, 2025, an employer was required to deduct tax from salary but did not deduct it. The employee has also failed to pay that tax directly. What is the consequence for the employer?

The employer is deemed an assessee in default in respect of that tax, apart from any other consequences. This applies where the employer did not deduct the tax and the employee has also failed to pay it directly.

  1. AThe employer is deemed an assessee in default in respect of that tax, apart from other consequencesCorrect
  2. BThe employer incurs no consequence because only the employee is liable
  3. CThe employer is liable only if the employee has also been assessed in default
  4. DThe employer is liable only for interest, not as an assessee in default

Explanation

Section 391(3) provides that where the person required to deduct (including an employer) does not deduct, or fails to pay, and the assessee has also failed to pay the tax directly, that person is deemed an assessee in default in respect of such tax. This is in addition to any other consequences. The employee's failure is a condition, not a shield for the employer.

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