Provision of salary arrears in accounts

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

28 May 2014 Good morning experts,

I am a Accounts person working in an IT Consulting firm where the company works for international clients and very employee benefits are there.

There is a company policy in which an employee can avail work from option during their illness days where they can not travel to office but the rider was that during that period the company will only pay mobile expenses and petty expenses and rest complete salary will be paid in future after 5 years from the date of last work from home in a calender year.

But as there was only one case in the organisation so not much have been done in that respect.

now I have joined this company recently and that salary has become due to that person after 5 years but as I see accounts that no provision has been shown in the books so pls advise what can be done in this case.

As now when we will be paying the arrears and deducting TDS as well.

So need help in this regard from an expert.

Thanks

Rupesh Jain

Rupesh Jain (Expert)
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28 May 2014 You have to make provision every for every employee. but this is due after five year.

its taxable in hand of employee in year when you pay.

Querist : Anonymous

Querist : Anonymous (Querist)

28 May 2014 thanks for the reply.

Just wanted to check if no provision has been done in the past then what impact can be shown in the books of account now.

Pls reply.

Rupesh Jain

Rupesh Jain (Expert)
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29 May 2014 you have to charge in prior period items . and debit to reserve and surplus a/c as per company a/c.

due to as per income tax its allowed when you pay it to employees.

Rupesh Jain

Rupesh Jain (Expert)
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29 May 2014 you have to charge in prior period items . and debit to reserve and surplus a/c as per company act.

due to as per income tax act its allowed when you pay it to employees.

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