Provisional entry bonus.
This query is : Resolved
10 August 2021
Dear Expert,
our company has recently changed it's salary structure for the newly joined employees and, in the recent change company included the Bonus amount in monthly CTC at a predefined rate on basic salary and, as per the new structure the company will pay the bonus amount at the end of the year irrespective of whether the company making the profit or not.
and my doubt is, whether we should record the bonus expense in every month or, annually at end of the reporting period, in the payment financial year ?
Note: the company is a SME Company.
our company has recently changed it's salary structure for the newly joined employees and, in the recent change company included the Bonus amount in monthly CTC at a predefined rate on basic salary and, as per the new structure the company will pay the bonus amount at the end of the year irrespective of whether the company making the profit or not.
and my doubt is, whether we should record the bonus expense in every month or, annually at end of the reporting period, in the payment financial year ?
Note: the company is a SME Company.
10 August 2021
Record the bonus expense annually at end of the financial year.
11 August 2021
According to Section 43B of Income Tax Act, expenditure is allowed to be deducted only in the year when such expenditure is paid, i.e. Bonus to employees. An exception is also provided if the expenditure is paid before filing the annual return u/s 139(1).
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