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Tax on Incentive to Employee in Kind - urgent?

Dilip (Working) (408 Points)

12 April 2011

Hi,

Few employees in our company getting an incentive in kind. This incentive isgiving by 3rd party (in our case Sony) on acheiving some target on sale.

So here question is whether this incentive will be taxed in the hand of employee under salary or other soure or under winnings and value to be taxed should be MRP of that products (given in kind).

Please reply.

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4 Replies

vignesh (B-com CS CA-Final CFA-level 1 candidate) (1053 Points)
Replied 12 April 2011

i guess they will b taxed as income from other sources and MRP of daa product

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Shriram Ramachandran (IPCC Student CWA Inter & Processing officer in GNSA Infotech Ltd) (492 Points)
Replied 12 April 2011

Hi Dilip & Vignesh

The Insentives is considered as a part of salary & it is fully taxable.......

Thanks

R Shriram

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 13 April 2011

Originally posted by : Dilip

Hi,

Few employees in our company getting an incentive in kind. This incentive isgiving by 3rd party (in our case Sony) on acheiving some target on sale.

- is the incentive accounted in your company records? if yes then its salary component, if no then its winning and to be accounted otherwise.

So here question is whether this incentive will be taxed in the hand of employee under salary or other soure or under winnings and value to be taxed should be MRP of that products (given in kind).

Please reply.

if the gifting company accounts their gifts under voucher independent, then they can pass it without showing in ITR provided the gift value is less than 5000, if more than 5000 than they have to show it in ITR as income from other sources, everything depends on voucher issued with incentive..

but if the incentive is passed through the employer company, then its component of salary without any doubt.

Abhishek Agrawal (Article Assistant) (36 Points)
Replied 25 April 2011

Here the employee is getting incentive in kind from other than employer. Point to be noted that to be taxable under salary there must exist employer and employee relationship. Hence not taxable under the head salary. It will be taxable under the head Income from the other sources considering the market value of that kind.