A number of employees from Tata Consultancy Services (TCS), the country’s largest software exporter, have reportedly received tax demand notices from the income-tax (IT) department due to alleged errors in their tax deduction at source (TDS).
The amounts in question reportedly range from ₹50,000 to over ₹1 lakh, depending on the employee's seniority. The issue appears to have arisen from a software glitch that led to outdated TDS claims on the income-tax portal. Reports indicate that the Income Tax department has sent notices to between 30,000 and 40,000 TCS employees concerning these discrepancies.
The notices, issued on September 9 under Section 143(1) of the IT Act, indicated a lack of record for the full payment made by the assessee for the March quarter of FY24, as per the reports.
TCS has advised its employees to hold off on any payments mentioned in the notices until further instructions are provided. The company has also reportedly notified the tax authorities of the problem and is collaborating with them to address it promptly.
Amid this development, shares of TCS rose 0.6% to ₹4,545.90 apiece on the BSE today. The stock opened higher today at ₹4,530.00, in contrast with the weaker broader market. The tech giant’s market cap stands at ₹16,38,613.75 crore. Over the past month, the company’s stock surged 7.95%, gained 9.20% in the last six months, and jumped 18.88% year-to-date (YTD).
Additionally, TCS announced in a BSE release on September 12 that it had been ordered to pay a penalty of ₹11,70,288 for FY 2019-20 under Section 73(9) of the CGST Act, 2017. The company plans to appeal this order and does not expect any significant impact on its financial, operational, or other activities.
TCS reported an 8.7% increase in consolidated net profit to ₹12,040 crore for Q1 FY25, up from ₹11,074 crore year-over-year. However, there was a 3.2% decline sequentially from ₹12,434 crore in the March quarter of FY24, attributed to annual wage increments. Revenue from operations grew 5.4% year-over-year to ₹62,613 crore but fell 2.2% quarter-over-quarter from ₹61,237 crore in Q4 FY24. The consolidated operating margin for the June quarter of FY25 was 24.7%, up 1.5% year-over-year, while the net margin stood at 19.2%.
