TDS on Bonus Provision

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This query is : Resolved

G.N.V.D.Kiran

G.N.V.D.Kiran (Querist)

12 March 2008 Our Company will be passed an entry by debiting to bonus account and crediting to bonus payable account on 31-03-2008. that bonus payable will be paid in june 2008.while calculating the staff personnel tax liability we have to add that amount of bonus of respective employee in 2007-08 financial year or 2008-09 financial year.

please clarify the bonus payment will be taxable in the hands of employee on receipt basis or accrual basis

CA Praveen Chopra

CA Praveen Chopra (Expert)

12 March 2008 In the personal return of employees, bonus will be taxable on accrual basis because it is covered under the head salary whereas in company return,deduction can be claimed only in the year of payment by vitture of section 43B.

CA J M Pattanayak

CA J M Pattanayak (Expert)

12 March 2008 Bonus is taxable in the hand of employee on receipt basis. Whereas in case of the employer it has to be accounted on payment or accrual basis which ever is earlier.

CA J M Pattanayak

CA J M Pattanayak (Expert)

12 March 2008 Bonus will be taxable in the hand of employee during Fy.2008-09 and not 2007-08.

CA. GOPAL SONIKA

CA. GOPAL SONIKA (Expert)

12 March 2008 receipt basis

CA Saurabh Maheshwari

CA Saurabh Maheshwari (Expert)

12 March 2008 ACCRUAL BASIS

Gopalakrishnan

Gopalakrishnan (Expert)

12 March 2008 Bonus is taxable on under the head of salary. Hence it is chargeable to tax iin the hands of employees on due or receipt basis which ever is earlier

However inthe hands ofthe employer, the same is allowed as deduction only if the amount is being paid before the due date of filing the return of income. Otherwise it is allowed only in the year of payment.