Tax implication on advance salary to staff

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 September 2017 Sir,

Our company pays advance to various staffs against salary which comes around 5 Lacs per month. Whether income tax or any other relevant law has any guidelines on such advances?

Thanks

CA. Sunil Gokhale

CA. Sunil Gokhale (Expert)
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11 September 2017 If the payment is in the form of advance against salary, that is, loan given and which will be deducted from salary of subsequent months, then no law/guideline is applicable. However, if the amount is paid as advance salary of subsequent month(s) then it will be income of the FY in which it is paid. Note the difference, the first is advance AGAINST salary income and treated as loan and not liable to tax but the second case is salary paid in advance (before it is due) and therefore taxable on receipt basis.