In an urgent communication sent to all field officers, the income tax department has asked its officials to not “send or pursue” any tax demands to former employees of the long-grounded Kingfisher Airlines.
According to senior government officials, the notice was sent on Thursday after revenue secretary Hasmukh Adhia intervened and directed the tax authority to do so.
“The intent with this communication is to ask field officers not to harass employees for the dues which are on unpaid salaries,” the official said.
Former employees the beleaguered airlines have been protesting, seeking help from the government and Supreme Court to ensure quick disbursal of their outstanding salaries and dues and from harassment by tax authorities.
The employees have alleged that they were under tax scanner as Kingfisher had failed to deposit the tax deducted at source (TDS) with the income tax department.
“Kingfisher airlines had over Rs 600 crore TDS due to the tax department of which Rs 150 crore has been recovered. The current due is Rs 450 crore,” the official said.
“Not remitting collected TDS is a serious offence under the Income Tax Act. It can attract penalty and a possible jail term anywhere between three months and 7 years under Sec 271C and Sec 276B of the Income Tax Act. There are sufficient instances where this has been imposed,” said MR Venkatesh, a Chennai-based Chartered Accountant and tax expert.
Under income tax laws, only two categories of executives are responsible for tax-related compliance – the managing director and director(s). Since Mallya was a director in KFA, he can also be held responsible for non-compliances under this Act.