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Tds deducion on salary

Rudrayani Shedjale (Assistant Accountant) (751 Points)

29 March 2018

We have made provision for salary to be given to an employee but its not paid up to 31.3.2018

while deducting TDS in the last qtr of f.y.2017-18, shall we deduct tds on the amount of this unpaid salary also?

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17 Replies

Divakar (Student CA Final ) (11857 Points)
Replied 29 March 2018

Tds on salary is on payment basis.. If u r gonna make payment in next month then deduct tds

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RAJA P M ("Do the Right Thing...!!!") (128075 Points)
Replied 29 March 2018

Tds on salary deductible based on Payment...
So, The March Salary payable on April then no need to deduct TDS for the Month of March...

Rudrayani Shedjale (Assistant Accountant) (751 Points)
Replied 29 March 2018

this unpaid salary is for the month of July-17 & Jan-18 which has not been paid so far.

Divakar (Student CA Final ) (11857 Points)
Replied 29 March 2018

Then no need to deduct tds.... Deduct tds at the time of payment...

Rudrayani Shedjale (Assistant Accountant) (751 Points)
Replied 29 March 2018

thank you.

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Rudrayani Shedjale (Assistant Accountant) (751 Points)
Replied 12 April 2018

if employee do not produce his previous income details but his per month salary is 1lac in current organisation & we have paid him salary for 2 months of f.y.2017-18 i.e.feb & march do i need to deduct his tds?

Divakar (Student CA Final ) (11857 Points)
Replied 12 April 2018

Yes deduct tds.... If he is not employed for that 10 months only then not deduct tds... But for safer side always deduct tds.... Employees get refund for that if he has no tax liability

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(Guest)

Does this mean, that this TDS on March salary is paid in May, if salary is actually paid in April? If yes, will it be shown in Apr-Jun TDS return? So, while filling annexure II of form 24Q of Jan-Mar month return. Total salary due will be shown (Apr-Mar)? But TDS will be for 11 months only? How this is done practically? This payment condition under 192 always confuses.

Divakar (Student CA Final ) (11857 Points)
Replied 12 April 2018

Why u confused sir... Book in march month and deposit tds before filing of return of jan to march tds return and show in that... Tds on salary is on payment basis means means when u hv arrears of salary and u r not going to pay..... In ur example py march salary is also paid in current month April na... Then 12 months salary booked na.... Better follow provision basis... Booked in each month and deposit ur tds accordingly....

(Guest)

Yes, everybody follows accrual basis for salary tds. But what is the reason of on payment, when other TDS sections says payment or credit?

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Divakar (Student CA Final ) (11857 Points)
Replied 12 April 2018

Provision basis followed only for march month and not for whole year sir.... Thats because of ur expense book in that financial year... And suppose u paid all 12 months salary in the month of march and then also ur tds deposit liability should be arised... And in that case u can deposit tds for the whole year without any interest... And in case of salary average tax should be deposited...

(Guest)

OK. Thanks. Just out of curiosity, why TDS on salary is on payment basis when salary is taxable on due or receipt basis?

Divakar (Student CA Final ) (11857 Points)
Replied 12 April 2018

Sec 15 clarifies that Year of chargeability of salary: Due or receipt whichever falls earlier : Salary is taxable on due basis or on receipt basis , whichever is earlier. Hence, a) Salary due in a PY is taxable, even if it is not received. b) Salary received in a PY is taxable, even if it is not due. c) Arrears of salary received during the current PY shall be taxable in the current year if not charged to tax in an earlier PY.

Divakar (Student CA Final ) (11857 Points)
Replied 12 April 2018

Tds on salary is on payment basis may be the reason of no flat rate of tds is prescribed in case of salary... Calculate total tax amount on the basis of pay scale and divide by 12...then u hv to pay average tax... May be pay scale is different and later payments is different amount.. Reduced amount or any case... That's why may be tds on salary is on payment basis... Hope now u satisfied with the answer

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