Rahul (CA) (43 Points)
02 March 2010Dear all,
i want to know whether Cash gift paid to employees on occassion of Diwali is liable TDS on salary as FBT has been removed and whether it will be disallowed if amount paid exceeds the limit as specified under Rule 6 d Of The Income Tax Rules. under clause (a) of sub - section (3) of section 40A.
Amir
(Learner)
(4016 Points)
Replied 02 March 2010
Dear Rahul,
Cash Gifts to employees have always been taxable as Salary even when there was FBT........
Its just that Gifts in kind were not taxable when FBT was there........
After abolition of FBT - Gift in kind in excess of Rs. 5,000 shall be taxable as perquisite as per Rule 3
As far as Sec 40A(3) is concerned YES is covers payment to employees as well as will apply if amount exceeds the limit specified therein.
CAclubindia
