Tax deduction at Source

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Anju Palan (Querist)
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12 November 2008 Tax should be deducted under which section in case an Retired employee receives annual awards subsequent to his retirement, which may be received in the next financial year after his final settlement has been done.

Should it be deducted u/s 192 if this amount exceeds minimum exemption limit or should be deducted under different section, since the employer and employee relationship ceases to exist.

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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12 November 2008 If it is contractual it has to be u/s 192.

If it is a reward which was unusual and paid out of noreason other than a sudden feeling of gratitude or appreciation, no TDS provisions may be attracted. (Nevertheless section 56 will apply to the receiving person.) But one has to be also careful because a question may arise If he had not been an employee would he have got? The colour of relationship towards salary is more!!