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Time of Deduction of TDS on salary

RAJENDRA SINGH (Tax Consultant) (43 Points)

14 March 2008

Dear All,

Can anybody confirm me TDS on salary is deductible on payment basis or payable basis?
Please, also confirm me whether provision made for salary & bonus is subject to TDS or not u/s 192.

Thanks,

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3 Replies

O.D.SHARMA (DGM-F & A) (1734 Points)
Replied 14 March 2008

Payable basis for salary.Bonus taxable on payment year basin.

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sagar (CA Final) (379 Points)
Replied 14 March 2008

What if TDS on salary is not deducted every month or quarter

M.Sriram Shenoy (CA Final) (814 Points)
Replied 17 March 2008

Tax deduction u/s.192 is warranted only at the time of actual payment of salary.

Therefore, in case where an employer follows mercantile system of accounting and provides salary on accrual basis, tax shall not be deducted u/s.192.

It may be noted that u/s15, salary income of an employee shall be chargeable to tax on due or receipt basis, whichever is earlier.

Still, for the purposes of deduction of tax u/s.192, it is always to be made on actual payment of salary irrespective of the method of accounting adopted by the employer.

As far as bonus, it is to be made on payment basis.If bonus is provided in the books of accounts for the month of march, then such provision is allowable only if it is paid within 30 days immediately.