22 August 2007
A company has paid an amount to employee's family on death of the employee due to an illness. This amount does not from part of gratuity. My query is what will be the nature of payment in case of company?Whether TDS has to be deducted and if yes, under what head ? And from employee point of view, will it be in the nature of capital receipt, hence not taxable? Kindly advice.
22 August 2007
I think TDS would be deducted u/s salary only. further company would also be liable for FBT...It would also be taxed in the hand fo recipients under other sources.
24 August 2007
Only those expenditure should be included under employees welfare which are for the welfare of all employees or a group of employees and not for an employee as privileges, benefit, et. given to an employee. Hence, it should not be liable to FBT. TDS is not to be deducted as this doesnot partake the character of salary. It is not taxable in the hands of employees family as it is to be treated as capital receipt.
CAclubindia
