TDS on referral bonus

This query is : Resolved

AJK (Querist)
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30 July 2009 Our co pays "referral bonus" to employee who refer other candidates to our co. E.g ABC refers XYZ and XYZ joins co, then ABC will get specified amount as referral bonus. My query -
Presently this payment is made out of payroll and TDS is deducted under head of prof fees. Can this amount be routed through payroll and TDS deducted under head salaries ?
Which one is correct and why ? Pl revert for opinion

Shyam Lal Naik

Shyam Lal Naik (Expert)
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30 July 2009 The service is not in the nature of Professional or Technical Fee.

Since it is paid to employees through pay roll, treating it as part of salary is correct.

AJK

AJK (Querist)
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30 July 2009 Hi

It is not routed through payroll....my query is it will be appropriate to route it thru payroll....

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