23 November 2009
We have paid our employee a salary advance of Rs. 50000/- recently which will be deducted in equal installments of Rs. 7500/- per month. Upto March 2010 an amount of Rs. 12500/- will still be pending against advance of that employee. My question is should Rs. 12500/- along with his regular salary should be treated as taxable salary for the F.Y. 2009-10. and For the next year F.Y. 2010-11 an amount of Rs. 12500/- will be reduced from his taxable amount(since that amount will be deducted from his salary in year 2010-11). Kindly advise ?
23 November 2009
Hi Kamal, if it is given as advance salary then Rs. 50,000 is taxable on receipt basis. however, if the same is shown as loans and advances to employee, then it will partake the characteristic of loan and not the salary. Thanks and regards, CA Shakuntala Chhangani
CAclubindia
