Currently in our organization we are paying Medical reimbursement ( Rs. 15000 p.a.) annually in ( March) based on the actual bills submitted by each employee. Instead of that can we pay medical reimbursement every month ( Rs. 1250) & ask our employee to submit the bills from December to March to calculate actual tax liability in March. Is there any TDS omission from employers perspective, because employer will pay Medical reimbursement ( Rs. 1250) every month but deducting the TDS only in the month of January, February & March.
Because TDS rule says “ credit or payment whichever is earlier” you have to deduct the TDS on salary.
Further practically it is impossible for every employee to submit the Medical bills as well as Finance Department to check the same.
What is the way out?
CAclubindia
