Bonus received in Cash

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This query is : Resolved

nagpapu (Querist)

12 November 2009 The company is given one month bonus to employees by cash.
But the every month salary is credited to bank.

Whether the employees were liable to pay tax on Bonus or not. coz its not in records by employees.

is their any problem to company if they didnt deduct TDS on Cash Bonus

Thanks in Advance

chetan soni

chetan soni (Expert)

12 November 2009 Yes, employee needs to pay tax on this, as the same will appear on their Form 16 as bonus paid.

Companies responsibilities :
Company needs to deduct the TDS on it, in case if company fails to deduct the TDS then such bonus paid to employees will not be allowed as deduction while computing its taxable income u/s 40(ia).

Sunil

Sunil (Expert)

12 November 2009 Agreed. The bonus is taxable and ought to reflect in Form 16 and TDS deducted. Bonus or Gift cannot be considered as payment other than for adequate consideration if there exists an employer employee relationship on a continuous basis. Every amount received by the employee other than amounts reimbursed to employee as a pure agent for the business of employer (business travel tickets and hotel stay etc.) is an adequate consideration for employment and taxed as salary.

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