Proprietory firm breakup salary

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M. A. Imran (Querist)

22 January 2012 Hi,

Can a proreitory firm pay salary to its employees with breakup like Basic, HRA, TA, DA, food allowance, Telephone, medical etc.like a company?

Is a proprietory firm is required to deduct and pay Professional tax?

Kindly reply with reference to income tax at the earliest as it urgent.

Thanks in advance

CA Rushikesh Kolhe

CA Rushikesh Kolhe (Expert)

23 January 2012 Yes a proprietory firm can pay salary to its employees with break ups. There is no rule in income tax like only certain type of employers can pay salary with breakup. Any one can do this. Income tax also dont say anything regarding the pay heads. It is employers discretion to decide the salary structure.

In profession Tax
"Employee" means a person employed on salary or wages,
and includes--
(i) A Government servant receiving pay from the revenues of the Central Government or any State Government or the Railway Fund.
(ii) a person in the service of a body, whether incorporated or not, which is owned or controlled by the Central Government or any State Government, where the body operates in any part of the State, even though its headquarters may be outside the State;
(iii) A person engaged in any employment of an employer, not covered by items (i) and (ii) above;
(c) "employer" in relation to an employee earning any salary or wages on regular basis under him, means the person or the officer who is responsible for disbursement of such salary or wages and includes the head of the office of any establishment as well as the manager or agent of the employer;

These are the definitions under Profession tax. Accordingly any person who is disbursing salary to it's employee is liable to deduct profession tax according to the slabs as under
if salary up to 5000 pm then no PT
if salary more than 5000pm up to 10000pm then pt is 175 pm
if saalry more than 10000pm then pt 200 pm and in feb it is 300.

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M. A. Imran

M. A. Imran (Querist)

27 January 2012 Thanks alot sir for your kind nice answer.

M. A. Imran

M. A. Imran (Querist)

27 January 2012 Thanks alot sir for your kind nice answer.

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