Salary paid in advance

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 August 2012 Dear Sir,

One of our employee caught in an accident while travelling & was on bed for 1 year. Company has paid him advance salary for every month during last year Apr-11 to Mar-12. Now the employee joined co & he is getting regular salary after deduction of advance paid to him in last year. We have added that advance income in his form 16 for last year. Now as we recovering the adv from his salary can we deduct the same from his gross salary to compute tax.

Arun Biyani

Arun Biyani (Expert)
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23 August 2012 salary is taxable in hand on assessee of receipt or due which ever is earlier basis, therefor since last year u had paid him salary in advance and not advance, u were correct in taking the salary in his form 16. Now this year u should not treat it as advance and should not recover the amount and even if u recover salary would be consider the gross amount and not after deducting the advance. to nullify the effect what u could do is pay him less salary like if u have salary head such as other allowance or something, u can pay reduce other allowance to that extent, rather paying him his regular salary and then deducting the advance.