Over 30,000 TCS workers affected by TDS errors; Tax dept sends notices

TCS has a TDS problem. Numerous employees at Tata Consultancy Services (TCS) have been issued demand notices by the income tax department due to discrepancies in tax deducted at source (TDS) claims. According to a report from The Times of India, between 30,000 and 40,000 employees received these notices, with the tax demands ranging from Rs 50,000 to over Rs 1 lakh, depending on their seniority within the company. 

The problem is reportedly believed to have stemmed from a software error that resulted in TDS claims not being properly updated on the income-tax portal.

These notices, sent out on September 9 under Section 143(1) of the Income Tax Act, indicated that there was no record of the full payments made by employees for the March quarter of FY24. Chartered Accountant Himank Singla also commented on the situation through his post on X, explaining that many TCS employees were receiving tax demands for the assessment year 2024-25 due to incorrect TDS updates on the department’s portal, leading to withheld refunds.

The notices raised concerns among employees, as they highlighted discrepancies between the TDS claims made by individuals and the data available with the tax department.

The company has send an internal communication advising employees not to take any action on the demands until further instructions were provided, The Times of India reported. TCS also informed its employees that it had notified the tax authorities and was working toward resolving the issue quickly.

In a separate internal message, TCS communicated that the tax authorities had provided clarification and that they would be reprocessing the tax returns, after which the TDS information would align with Form 26AS issued by the income tax department and Form 16 Part A issued by TCS.

TCS added 25k employees in first quarter of FY25

Business Standard reported in July that TCS saw a net headcount increase of 5,452 employees in the first quarter of FY25, bringing the company’s total workforce to 606,998. This marked the first headcount growth for TCS after three consecutive quarters of decline. In the same quarter, TCS hired 11,000 freshers, with Chief Human Resource Officer Milind Lakkad noting that a portion of these hires were freshers whose onboarding had been delayed from the previous financial year. He further stated that there was no remaining backlog from the previous year and that all new hires moving forward would be fresh recruits offered positions this year.

TCS was also noted as the first company, following Accenture, to report a net increase in its headcount, with Accenture having added 7,882 employees by the end of the third quarter of FY24, bringing its total workforce to 750,200.