Tds

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 December 2011 A is employee of X Ltd. under the contract with X if he leaves X he has to pay compensation of Rs. 20,000. He hoins Y ltd. Y ltd. pays a rs 20,000 as reimbursement to A. abd also deducts Tds on Rs. 20,000. whether Y ltd is justified in deducting TDS.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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22 December 2011 Payment was the liability of employee but made by the company on behalf of employee and therefore Y ltd is justified in deducting TDS from his employee u/s 192.

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Querist : Anonymous

Querist : Anonymous (Querist)

23 December 2011 Thanx. i agree. It will be perquisite defibed by section 17 It Act. what would be the position, if the payment is made by A. and after joining the new employer, the latter reimburses (TDS also deducted)the payment made by A. My view is that the new employer is under no obligation to reimburse the same. its just a one time voluntary payment (for whatever resons), hence not part of salary.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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23 December 2011 Even in case of reimbursement it will be treated as perquisites and TDS u/s 192 will be deducted thereon.

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