17 December 2009
A Ltd. is a US based company and B Ltd. is an Indian Subsidiary of A Ltd. A Ltd. pays salary to the employees of B Ltd. its subsidiary directly into their bank account. Please note that B Ltd. does not pay any salary to its employees. (All the employees are Indian resident)
In this case who is liable to deduct TDS on salaries of the employees?
Also A Ltd. has paid salary to the employees before the incorporation of its subsidiary i.e. B Ltd. Then on what amount TDS is to be deducted and by whom? Also suggest the accounting treatment of salary in the books of B Ltd.
21 December 2009
In case of employer enployee relationship it is employer who is responsible to make salary payments and TDS from salaries. If B Ltd. is employer it is their responsibility. Before its incorporation A. Ltd. must be the employer and in that case it is responsibility of A Ltd. TDS has to be remitted according to sec 192 of IT act
CAclubindia
