Taxability of salary not paid or provided for
This query is : Resolved
Ashok Bansal
(Querist)
25 July 2011
Company Employer had not paid or provided for salary liability of one senior employee for the full FY 2010-11 and so no TDS was deducted and paid. As the Company is not issuing Salary certificate, how may the IT return of employee be filed. As the accounts of the company have been closed, is it possible for the company employer to provide salary liability for FY 2010-11 in FY 2011-12 and issue salary certificate for the FY 2010-11.
CA Navin Jain
(Expert)
25 July 2011
employer can provide the salary in the year 2011-12 but shall not issue salary certificate for the fy 2010-11
25 July 2011
yes employer can provide for salary in 2011-12
Ashok Bansal
(Querist)
26 July 2011
But what about the taxability in the hands of employee?
26 July 2025
Here’s how it generally works:
### 1. **Salary not paid or provided for in FY 2010-11:**
* Since the employer neither paid nor accounted for the salary in FY 2010-11, the employee cannot treat that income as earned in FY 2010-11.
* Hence, the employee **should not include that salary in the ITR for FY 2010-11**.
### 2. **If employer accounts for salary liability and pays in FY 2011-12:**
* Then salary will be taxable in the hands of the employee in **FY 2011-12** (the year in which payment or provision is made).
* The employer should issue the salary certificate for FY 2011-12 accordingly.
### 3. **Regarding TDS:**
* The employer should deduct TDS in FY 2011-12 on the salary paid/provided then.
* If TDS was not deducted earlier for FY 2010-11, it cannot be claimed there, but can be adjusted in FY 2011-12.
### 4. **Employee’s filing of ITR:**
* Employee should file ITR excluding the unpaid salary for FY 2010-11.
* Include the salary income only in the year when it is actually received or accounted for (FY 2011-12).
---
### Summary:
* Salary is taxable in the year it is due or received.
* Since employer did not provide for it or pay it in FY 2010-11, employee cannot include it in that year’s income.
* It will be taxed in FY 2011-12 when salary is actually paid or accounted for.
---
If you want, I can help draft a formal note for your client or employer regarding this. Would that help?
### 1. **Salary not paid or provided for in FY 2010-11:**
* Since the employer neither paid nor accounted for the salary in FY 2010-11, the employee cannot treat that income as earned in FY 2010-11.
* Hence, the employee **should not include that salary in the ITR for FY 2010-11**.
### 2. **If employer accounts for salary liability and pays in FY 2011-12:**
* Then salary will be taxable in the hands of the employee in **FY 2011-12** (the year in which payment or provision is made).
* The employer should issue the salary certificate for FY 2011-12 accordingly.
### 3. **Regarding TDS:**
* The employer should deduct TDS in FY 2011-12 on the salary paid/provided then.
* If TDS was not deducted earlier for FY 2010-11, it cannot be claimed there, but can be adjusted in FY 2011-12.
### 4. **Employee’s filing of ITR:**
* Employee should file ITR excluding the unpaid salary for FY 2010-11.
* Include the salary income only in the year when it is actually received or accounted for (FY 2011-12).
---
### Summary:
* Salary is taxable in the year it is due or received.
* Since employer did not provide for it or pay it in FY 2010-11, employee cannot include it in that year’s income.
* It will be taxed in FY 2011-12 when salary is actually paid or accounted for.
---
If you want, I can help draft a formal note for your client or employer regarding this. Would that help?
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