Hi Friends,
I have recently come across a situation and need your advice.
I work as independent consultant and have one of my clients whom i regularly provide services have deducted TDS to tune of Rs 10000 and deposited for me without my knowledge. I came to know about it as I can view TDS paid on my behalf thru Form 26AS and I did recently accidentally checked. I get payments in cash from said client and that too not very high amount say couple of thousands per month based on services rendered. I am not employed by the client in anyway and its a verbal consulting understanding on need basis.
Now I know the right thing to do is to ask the client why he has shown TDS for me for such high amount without my knowledge.
I was wondering what do i lose even if i keep mum and assume ignorance. Does it hurt me in anyway in long run. I never paid taxes and I was never intimated by client. Infact if i show the corresponding salary in my income; my tax return will be strong as i did not had much income in few months in this financial year.
Apart from morality issues; what else are the potential known risks if i follow this approach?
I just want to weigh in what risks and potential difficulties i may face.
Pls share your thoughts. Pls note that the deduction is under 194J which is contracting. This is also my situation as I am not employed. However The worry aspect is I have been paid say rs 40000 (rs forty thousand) all in all in last few months on which he has deducted TDS 10% but also he has shown extra couple of lakhs as payment on which he has done deduction of TDS @10% for me. But I was never informed; have never rendered any extra services and have never received these few lakhs shown in this form.
I am wondering why he would show these payments under sec 194J and also pay TDS @10% when he has not actually paid me anything and have not even informed me.
I do not want to confront but rather find out first potential implications.
