ARREAR RECIVED IN RESPECT OF PROFESSIONAL SERVICES

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This discussion addresses the tax treatment of arrears received for professional services. The core question is whether these payments should be taxed under the head 'Salary' or 'Profits and Gains from Business or Profession' (PGBP). It also explores the implications for filing Form 10E and the relevant assessment year, particularly when TDS has been deducted in a later financial year.

Suresh S. Tejwani

Suresh S. Tejwani (Querist)

10 July 2022 Mr.A providing professional services to company X and he consider it as income from PGBP from past years. Mr.A received arrears of Rs.58875 for the month of January , february & March - 2021 in the month of JULY - 2021 . Whether arrears received in respect of professional services is taxable under the head salary or PGBP ? If taxable under salary, whether MR.A has to file Form 10E for the assessment year 2022-23. ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

10 July 2022 It will be considered as professional fees only. Should have been declared in ITR of AY 2021-22.

Suresh S. Tejwani

Suresh S. Tejwani (Querist)

10 July 2022 MR.A received increment retrospectively from the month of January - 2021 and he came to know about it in the month of JULY - 2021 . The company X has also deducted TDS on the arrears in the AY 2022-23 . So it is shall be declared and taxable in the AY 2022-23 ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

10 July 2022 When TDS is deducted in AY 22-23, you have good option to declare income in this year.

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