Variable pay

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Guest

Guest (Querist)

11 March 2021 I will receive variable pay in April 2021 for the services of March 2021. In which financial year Form-16 it will be reported and taxed?

CMA Poornima Madhava

CMA Poornima Madhava (Expert)
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11 March 2021 Generally, such transactions are accounted in the year to which it would pertain. In your case, if the employer chooses to account it as an expense for 20-21, form 16 for 20-21 would include such transaction as well. On the contrary, since liability to deduct tax at source on salary arises only when payment is made (in this case April 21), the employer has an option to show this transaction in form 16 for the subsequent year.