If Employer have deducted less Income Tax for resigned employees how we can handle this scenarios ?Any best practices for the same to avoid such issues ?
You should collect the investment declaration @ the start of year and should start deducting the tax. So the chances will be less for short deduction.
If you have deducted less by mistake then you need to inform employee about the same so that he will be aware before filling his returns.
To avoid such errors as Ankit mentioned, we need to ask employees to submit their declaration in the beginning of the year and recalculate the tax as per the documents submitted at the end of the year or whenever employee leaving the company [middle of the year]. By doing so you can eliminate shot deduction.