Income tax on salary

This query is : Resolved

sarathy (Querist)
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23 April 2009 what is the tax treatment in case when the employer paid the tax to the it department on behalf of the employee.Whether this expences made by the employer can be allowed or disallowed in the hands of the employer and what will be the case in the hands of the employee as well.

CA Tilak Raj Sharma

CA Tilak Raj Sharma (Expert)
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23 April 2009 It will be treatment as salary expense in the hand of employer. It will also be treated as income in the hand of employee. To solve this issue emplyer needs of pay extra tax to cover the tax paid as income in the hand of employees.

CA Tilak Raj Sharma

CA Tilak Raj Sharma (Expert)
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Vipul J. Bhavsar

Vipul J. Bhavsar (Expert)
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23 April 2009 The Income Tax paid by the Employer on behalf of the Employee will be deductible for the Employer.
The tax paid by employer will be taxed in the hands of the Employee under the head "Salary".

Brij Bhushan Sangal

Brij Bhushan Sangal (Expert)
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23 April 2009 I agreed with vipul and Tilak, Tax paid by employeron behalf of employee will be treated salary part and taxable in the hand of employee while employer can treat it as salary expenses.

taxindiaconnect

taxindiaconnect (Expert)
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23 April 2009 In case the tax burden of the employee is taken by the employer, the tax so born by the employer becomes the part of salary expenditure and accordingly the expenditure on tax deposited is allowable in the had of the employer. The employer need to gross up salary paid to calculate the payment of tax and the income of the employee will increase correspondingly.

taxindiaconnect

taxindiaconnect (Expert)
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Manmohan ACA, CS

Manmohan ACA, CS (Expert)
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23 April 2009 Income tax Paid by employer on behalf of employee –
On non-monetary perquisites shall be exempted in the hands of employee u/s 10(10CC)
On other part of salary shall be grossed up in the salary and shall be taxable in the hands of employee.

Now Income tax paid by employer on behalf of employee:
If the income tax is paid on non- monetary perks: salary shall be disallowed u/s 40(a)(v)
on other part of salary: shall be allowed as usual business expenditure

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