NEW DELHI, India – A seven-month backlog in unpaid salaries is not the only menace Kingfisher Airlines staff is grappling with these days. In a double whammy to Kingfisher’s employees, the income-tax department has begun sending out notices directing them to clear tax liabilities, which run into several lakh of rupees for some.
While the bankrupt airline, by not depositing the TDS, or tax deducted at source, still owes over Rs 60 crore in taxes to the government, the employees, who are already grappling with a cash crunch due to unpaid salaries for the past seven months, are wondering how the tax dues from the airline are their responsibility.
“The company (Kingfisher Airlines) has not given us ‘Form 16’ since 2009. We did not know that the company was not depositing the TDS to the central government. I applied for a tax refund to get some money since there’s been no salary for a while and because my tax was not deposited to the government, and in return I received a notice from the I-T department,” a pilot with the airline told ET.
A copy of the notice served on him reads: “The demand is arising as the pre-paid taxes claimed by you are not matching with the data available in the system. You may, kindly write to assessing officer giving proof in support of your claim.”
ET spoke to an assessing officer who said they have no alternative but to issue notices. “We are aware of the developments and in various cases people have come to us, but there is not much that we can do because most of this is system generated,” the official explained.
The I-T department issued notices to employees demanding TDS, since the tax deducted by the employers has not updated in the department’s system. There is a mismatch in the tax claimed by employees as the tax remains outstanding with KFA failing to deposit the same to the government. “The demand notice will ask employees to clear the dues for processing of I-T returns. Outstanding tax deduction is ultimately the responsibility of employees, who needs to clear the dues,” a tax official said.
Kingfisher had deducted TDS from employees account but failed to transfer the same to the government. In June 2011, the last TDS was received from KFA. The I-T department has served them notice as the arrears were over 300 crore for the last two years. The department tried reaching KFA management on the same. But the management did not respond to the tax department’s missive. As a result, the Kingfisher account was attached in February 2012 for non payment of TDS.
According to a finance ministry official, the total service tax dues alone on Kingfisher Airlines are above Rs 60 crore. The airline has not deposited service tax collected from passengers with the tax department since last November. “We had frozen most of their accounts but in view of the suicide committed by an employee’s wife some money was released to allow payment of salaries,” he said. However, so far none of the employees of the airline, which has debts upward of Rs 7,000 crore, has received any salary.
However, for the non-compliance by the company, some employees could face the heat because not every assessing officer would be lenient, a former employee now affiliated to another airline said.
The department had served notice in December last year to Vijay Mallya and directors of the company. However, KFA approached Karnataka HC, which passed a stay order on it. “The order will be issued against the company again,” says a person familiar with the development.
“Some notices have been issued. Also, there are some cases where people have changed jobs and as per their existing tax liability notices have been sent. But no action has been taken in terms of any penalties on KFA employees,” another assessing officer said, adding that only in certain cases could they be lenient.