What if your employer does not pay salaries or fails to deposit TDS or PF?
MAS Team | 16 June 2014
Some companies may be in bad shape, because of which they may fail to pay salary to their employees. Some even do not deposit the tax deducted at source (TDS), provident fund (PF) components with authorities as mandated by law. So what is the remedy available for such an employee to get his salary and due credit for TDS and PF?
For unpaid salary, approach the Labour Commissioner who will help re-concile this matter with the company. If no solution is reached, the Commissioner will hand over the matter to the Court, whereby the employee can make an application to the Labour Court under Section 33 (C) of the Industrial Dispute Act, 1947. If the Court is satisfied with this application, it shall issue a certificate for the amount to the Collector who shall proceed to recover the same as an arrear of land revenue.
Please make sure that you make such an application within one year from when the money became due to you from the Company. All other benefits such as Provident Funds, capable of being computed in terms of money, shall also be included in the amount to be recovered.
If you are an employee above the executive level or a manager and above, you can also file a case against the Company in the Civil Court.
Secondly, with regards to the Company's failure to file tax returns and non-submission of Form 16, the Income Tax Department has stated that, "if the employer does not deduct tax and employee also does not pay his due tax, the ultimate responsibility to pay tax rests on the person who has earned income. However, if the employee deposits such tax, then the employer will be liable for interest and penalty for failure to deduct tax". (For more information go to )
It is of utmost importance that you retain and preserve any and all of the documents in your possession pertaining to the Company and its investors, including any and all salary slips and/or receipts. 
For further help, contact the tax Ombudsman in your region, who would be better equipped to help you out with the necessary procedures, as per the updated Income Tax Rules. 
And lastly, if you have been personally affected by any of the Company's fraudulent activities, you may be entitled to seek penalty. If it can be proved that the Company was involved in fraudulent activities because of which you weren't paid your salary, then the following remedies would be available to you.
Section 447 of the Companies Act, 2013 (which came into effect on 12th September, 2013) lays down the specifics of punishment for fraud, wherein the penalty includes a term of imprisonment and fine, which is detailed further in that section.
You can intimate the Registrar of Companies of the suspected fraudulent activities of the Company, and subsequent measures shall be taken under section 447 of the Companies Act. You can also file a criminal complaint against the company under the Indian Penal Code.