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Tds on incentive

Krishanu Majumder (Accountant) (174 Points)

01 June 2015

Should tds be deducted on total incentive? Or there is any exemption. Tds to be deducted on accrual basis or payment basis? under which section? Is the rate @ 1%? Pls help

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CMA Poornima Madhava (CMA) (13112 Points)
Replied 01 June 2015

Assuming it to be payable/paid to employees,

1. Yeah TDS u/s 192 to be deducted wherever taxable income exceeds the exemption limit

2. It has to be deducted at the time of payment

3. Rate is not @ 1%

4. Incentive to employee is treated the same way as salary.

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Vikas Gupta (Tax Executive) (530 Points)
Replied 01 June 2015

Incentive (if not stated otherwise) is the part of salary and all the relevant provisions and sections will be applied accordingly. In my view, Poornima Ji is correct in all cases except point no. 2 i.e. TDS is always deductible on accrual or payment basis, whichever is earlier.

CMA Poornima Madhava (CMA) (13112 Points)
Replied 01 June 2015

@ Vikas: What u said is correct for others except sec 192. For sec 192, TDS deduction is always at the time of payment. https://www.incometaxindia.gov.in/booklets%20%20pamphlets/tds-on-salaries.pdf (refer 2.4 on page 4)

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