26 November 2010
I Mr. A is a contractor and Mr. B and Mr. C are his employees. But while distributing the salary Mr. A said both of them that he will pay only to Mr. B through and Mr. B will pay to Mr. C.
Then my question is how to show this income in B's account and if Mr. A is doing like this it shows more income earned by B. and he has to pay more tax. kindly help me in such situation
27 November 2010
Why this situation, if B is getting C`s Salary and giving to C, there relationship between A & C may not be as Employer and employee. C become employee of B.
Conclusion: B need to book total amount received as Income only
29 November 2010
In this case, B will have to show the total amount received as his income. the amount that he further pays to C will be shown as his expense. In Income tax return he will get deduction of this amount as a business expenditure. So. he will not be paying more tax as he will get deduction of salary paid to C. Also, Mr. Ramesh is right in saying that in the above case, C is not an employee of A but he is an employee of B.
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