Abinash Ghosh (Service) (41 Points)
24 February 2010Dear all
I need a help on the following subject.
In a public sector undertaking (PSU) one of the employee dies before drawing his salary. Now company is paynig the accrued salary to legal heirs of the deceased. whether the employer is liable to deduct TDS on the payment to legal heirs of the deceased. Please refer some section or case law or circular or notification in the answer.
THANK YOU.
Amir
(Learner)
(4016 Points)
Replied 25 February 2010
Dear Abhinash,
What is being paid is a "SALARY" & not a "Gratituous payment on Death", therefore TDS will be deducted as per slab & will be included in the return of the deceased to be filed by legal heirs......
sudhir rawal
(B.COM/PCC/ARTICLE/'O'LEVEL)
(314 Points)
Replied 25 February 2010
| Originally posted by : Amir | ||
 |
Dear Abhinash, What is being paid is a "SALARY" & not a "Gratituous payment on Death", therefore TDS will be deducted as per slab & will be included in the return of the deceased to be filed by legal heirs...... |
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sir will you tell me that an is deceased person covers under defination of person under income tax urgent reply........................
Amir
(Learner)
(4016 Points)
Replied 25 February 2010
Dear Sudhir,
"NO" -
There can be no assessment on a dead person - The assessee under the Act has ordinarily to be a living person and cannot be a dead person because his legal personality ceases on his death. Therefore, there can be no assessment on a dead person- CIT v. Amarchand N. Shroff [1963] 48 ITR 59 (SC).
C.Balaji
(Learner)
(1867 Points)
Replied 25 February 2010
Dear Amir........
then you say that the amount paid will be treated as salary and TDS will be deducted accordingly........and the return should be filed by the legal heir........rite......
Amir
(Learner)
(4016 Points)
Replied 25 February 2010
Dear Balaji,
The judgement says that "Person" doesnot include a "deceased" therefore no assessment can be made on deceased....I mean it;s only post death one is excluded from the definition of "Person"
Whereas the case was for taxing Salary, u cannot say that one has earned salary after his death, he must have earned it prior to his death...
It will be taxable in the hands of deceased (through his legal heir) cos salary is taxable on receipt or due whichever is earlier basis, Earning of salary is a pre death event & therefore will be taxable in the hands of deceased itself.
Now coming on to TDS, in case of salary TDS is to be deducted at the time of PAYMENT, therefore TDS shall be deducted.
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