Our company is paying a fixed % of employee’s CTC as annual incentive to all employees on successful completion
of 1year of service. If employee leaves before completion of 1 year incentive is not paid.
Employee’s tax liability is calculated on the basis of the declaration of income filed by them for the relevant year.
And such liability is apportioned on monthly basis and equated installments are recovered each month as TDS from
employee’s salaries.(including on incentives payable in future)
Presently above mentioned annual incentive is also considered in the computation of the tax. Whether or not it is
been paid by the end of the relevant financial year.
Please advise us whether such incentive shall be taxed in the month it becomes due or shall it be taken from the beginning
of the year for TDS computation.
CAclubindia
