12 November 2009
Yes, employee needs to pay tax on this, as the same will appear on their Form 16 as bonus paid.
Companies responsibilities : Company needs to deduct the TDS on it, in case if company fails to deduct the TDS then such bonus paid to employees will not be allowed as deduction while computing its taxable income u/s 40(ia).
12 November 2009
Agreed. The bonus is taxable and ought to reflect in Form 16 and TDS deducted. Bonus or Gift cannot be considered as payment other than for adequate consideration if there exists an employer employee relationship on a continuous basis. Every amount received by the employee other than amounts reimbursed to employee as a pure agent for the business of employer (business travel tickets and hotel stay etc.) is an adequate consideration for employment and taxed as salary.
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