Byju's failed to deposit TDS with Govt since last year, claim employees

Byju's, which was once India's most-valued startup, has been under fire since the start of 2022 for a range of issues, including accounting irregularities, alleged mis-selling of courses, and mass layoffs.

Current and former employees of Byju's were in for an unwelcome surprise while filing their income tax returns (ITR).

Despite pay slips indicating tax deductions, the edtech giant has allegedly not remitted the tax deducted at source (TDS) to the government since as early as July last year.

“It is Byju's responsibility to collect the TDS and deposit it in the government treasury. What it has done is deducted the TDS from the employees, but defaulted on depositing the same with the government. In few cases, it is for a year and in few cases it is for a few months,” said Hitesh Jain, a chartered accountant handling tax filings for several affected employees.

Moneycontrol spoke with eight current and former Byju’s employees for the story. The company didn’t respond to questions seeking comments on the matter.

Byju's, which was once India's most-valued startup, has been under fire since the start of 2022 for a range of issues, including accounting irregularities, alleged mis-selling of courses, and mass layoffs.

The company has laid off thousands of employees in the last 12 months as it battled a double blow of drying venture capital funding and slowing demand for online learning services. Since then, its investor board members have left too, citing differences with founder Byju Raveendran.

Earlier this year, Byju’s started a rights issue at a 99 percent cut on its last fundraise valuation of $22 billion. Some of its biggest investors — like Peak XV, Prosus and General Atlantic — have been trying to block the rights issue in court and replacing the company’s top management.

“I left the company around 4-5 months back and they have not paid my F&F dues yet. My monthly provident fund payments to EPFO have not happened since December. The last thing I need is to have to pay the tax amount once again,” said a disgruntled former employee who had worked with the company for around 4 years in Bengaluru.

“My request to the company would be to please settle the TDS amount with the government. It is one thing to not pay employees, but I think it is ‘anti-national’ to not pay your dues to the government,” he added.

Both current and former employees said that they have not received their Form 16, which is given by an employer to an employee and has details of income and taxes. When these employees logged in to the online income tax portal to check another document called Form 26AS, as the IT returns filing deadline of July 31 draws near, it did not have any details of TDS. That is when they got spooked.

“If a company does not deposit TDS with the tax department, it is an offence without a doubt. The company is required to deposit TDS in the 7 days of the following month in which it is being deducted. If they don’t, they are liable to pay interest for the delay, there is a penalty and it is also a prosecutable offence — which means the company’s directors can be put behind bars for this in some extreme cases”, said Ajay Rotti, founder and CEO of Tax Compaas, a boutique tax advisory company.

“It is not a common occurrence to not deposit TDS because most companies take this very seriously. Right now, court rulings are very clear that if the employer has not deposited the TDS, the employee is not liable to pay it,” he added.

The Section 276B of the Income Tax Act, 1961 — which deals with failure to pay taxes such as TDS to the Central Government — includes provisions of a fine as well as rigorous imprisonment between 3 months to 7 years.

The text of the law reads, “If a person jails to pay to the credit of the Central Government, the tax deducted at source by him as required by or under the provisions of Chapter XVII-B, he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine.”

Meanwhile, for many of its employees, the cash-strapped company has also not deposited monthly provident fund payments since December, according to data from EPFO.

Byju's last updated PF deposit data is from November 2023 when the employee count for whom PF was deposited was 16,220, which is a 66 percent drop from the employee count of January 2022 when the employee count of those whose PF was deposited was 47,632.

Further, former employees who left between September 2023 and March this year have not received their full & final settlements as yet.

A group of the employees have even been planning to drag Byju’s to the National Company Law Tribunal (NCLT), a court where the company is already battling legal showdowns with investors like Peak XV and Prosus, and multiple vendors whose payments have not been completed.

In a separate development, the NCLT admitted a bankruptcy petition filed by the Board of Control for Cricket in India (BCCI) on July 16 for non-payment of sponsorship dues.

After the embattled edtech company had paused its February and March salaries due to paucity of funds, Moneycontrol reported how the company’s employees were grappling with financial distress, humiliation and emotional trauma.

Meanwhile, the company is allegedly stonewalling employees trying to contact the human resources team. A current employee said that while several e-mails by him and his colleagues were met with vague responses, some others did not get any response at all.

Sources said that the company has begun settling some of the PF amounts in tranches, but there is still no clarity on when the process will be completed.

“The agony of the employees is real, but what can we do? For some employees, the payments of dues have begun and they have started getting the messages from EPFO. However, we cannot yet commit to a fixed timeline of when the payments will be completed,” said a person close to the developments.

In May, the cash-strapped edtech rolled out a new policy linking sales staff’s salaries to the revenue they generate every week, as it struggled to cover payroll amid shortage of funds.