As Byju’s is facing multiple crises, more legal troubles could be mounting for the directors of the Edtech company. A Moneycontrol report, published on Tuesday (16th July), has pointed out that Byju’s has not deposited the employee’s Tax Deducted on Source (TDS) to the government since last year despite deducting it from the employee’s salaries.
Citing tax experts, the report added that failure to deposit the employee’s TDS is a punishable offense for which the company’s directors could go behind bars.
The media portal spoke with eight current and former Byju’s employees regarding this issue whereas the Edtech company refrained from commenting on the matter. According to the report, when current and former employees of Bjyu’s proceeded to file their IT return as the last date, 31st July, nears, they came to learn that the company has allegedly not remitted TDS to the government since July last year. However, their pay slips indicated tax deductions.
Moneycontrol reported that both current and former Byju’s employees said that they have not received their Form 16 for three out of the last four quarters. Notably, an Employer hands Form 16 to an employee which has details of income and taxes. Additionally, on the income tax portal, the employees didn’t find any details of TDS on another document called Form 26AS which alerted them.
Hitesh Jain is a chartered accountant who is handling tax filings for several affected employees. Jain was quoted by Moneycontrol saying, “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.”
Ajay Rotti is the founder and CEO of Tax Compaas, a boutique tax advisory company. He explained that failure to deposit TDS with the government (Income tax department) is an offence.
Rotti said, “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 offense — which means the company’s directors can be put behind bars for this in some extreme cases.”
He further explained that it is a common practice to 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.
Several employees say Byju’s hasn’t deposited PF contributions since December, others accuse it for not clearing their full and final dues
According to the EPFO data, Byju’s has also failed to deposit monthly provident fund (PF) payments for several employees since December.
A disgruntled former employee who had worked with the company for around 4 years in Bengaluru, said, “I left the company around 4-5 months back and they have not paid my F&F (Full and Final) 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.”
He added, “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.”
The Moneycontrol report added that the last data available when Byju’s deposited PF was from November 2023. At that time, it deposited PF for around 16,220 employees. This was a drop of 66% in employee count as it had deposited PF for 47,632 employees in January 2022.
However, sources said that Byju’s has started settling some of the PF amounts in tranches, but there is still no clarity on when the process will be completed.
Furthermore, former employees who left between September 2023 and March 2024 have not received their full & final settlements as yet, the Moneycontrol report added.
Byju’s grappling with multiple crises
Once India’s most-valued startup, Byju’s and its founder Byju Raveendran have been grappling with a range of issues since 2022. These include allegations of accounting irregularities, alleged mis-selling of courses, and mass layoffs.
In the last 12 months, the cash-strapped ed-tech firm has laid off thousands of employees. The company had earlier paused its February and March salaries because of a lack of funds. It is facing issues as the venture capital funding is drying and on the other hand, the demand for online learning services has been on the decline in the post-COVID period. Since then, its investor board members have also left while citing differences with company’s founder Byju Raveendran.
Earlier this year, Byju’s initiated a rights issue that saw a 99% cut on its last fundraising valuation of $22 billion. A few of its biggest investors including Peak XV, Prosus, and General Atlantic have been attempting to block the rights issue in court as well as replacing the company’s top management.
Amidst several controversies, Byju’s in May, rolled out a new policy that linked sales staff’s salaries to the revenue they generate every week.
Furthermore, it is alleged that the company is trying to prevent its employees from contacting the Human Resources team. A current employee said that while several of his and other colleagues’ e-mails received vague responses, others did not even get any response.
According to the report, a group of the employees have been mulling dragging the Edtech company to the National Company Law Tribunal (NCLT), where the company is already battling legal issues with investors like Peak XV and Prosus, and multiple vendors whose payments have not been completed.
NCLT admits Byju’s to insolvency resolution process
In a separate major development on 16th July, the Bengaluru bench of NCLT admitted Byju’s parent Think and Learn to the insolvency resolution process for defaulting on Rs 158.90 crore. The order was passed on a plea filed by the Board of Control for Cricket in India (BCCI). The Tribunal also dismissed Byju’s request to refer the dispute to arbitration.
According to a November 2023 order, the BCCI had claimed that Byju’s defaulted on a payment of Rs 158 crore. The order had read, “It is stated that the general notice was issued to Byju’s vide email dated 06.01.2023 and the default amount of Rs 158 crore, excluding TDS as reflected.”
