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TDS on MD salary

This query is : Resolved 

11 October 2009 Can i pay salary and TDS at the end of the year of managing director by issuing a cheque in a pvt ltd co

11 October 2009 yes ,you can pay .(the answer is in context with income tax act only not company law.I assume you have checked details about company law))

As far as salary is concerned its a agreement between employer and employee and they can mutually decide all terms including payment of salary.

second tds,as per section 192 tds is deductible at the time of payment ,and in present case payment is being done at the end of the year so tds is required to be deducted at the year end (date of payment only)

so the above entry is valid and no complication as far income tax is concerned

11 October 2009 Agree with Expert

11 October 2009 Agree with expert but if you credit salary every month in your books then you have to deduct TDS every month even you pay salary at the end of year.

11 October 2009 Agree with expert Goel and TDS should be deposited online ( not by cheque ) as it became mandatory for companies to Deposit TDS online

11 October 2009 wat bout interest figure of TDS

even though i m payin salary of 35000 a month at year end .. but still the same is due every month and hence TDS also becomes due every month i understand .. now if i pay salary in one go at year end .. shouldnt i pay interest on the whole year TDS

Kindly shed light

11 October 2009 even if you are giving credit to salary payable account ,in that case also ,tds is deductible only at the time of payment of salary .

One thing every body should clear in his mind that unlike other section as per section 192 tds is deductible only at the time of payment not at the time of credit or payment which ever is earlier basis.

so dear Aisha jain

as I have earlier mentioned in my reply there is no liability of income tax month by month so question of payment of Interest does not arise at all.

11 October 2009 In the above referred case tds is deductiable every month when you credit the same to the account of the managing director. Eventhough employer employee relationship exsists the priviate limited companies will credit the salaries of directors for tax savings purposes and will utilise money when they want.

Therefore you have to deduct tds when you credit to their account. Otherwise you will in danger that the assessing officer can disallow the entire expenditure for non compliance with tds provisions.

12 October 2009 Disagree with CA B Srinivas
First of ALL as per section 192(1) Tds is deductible at the time of payment of salary .relevant part reproduced hereunder
192. (1) Any person responsible for paying any income chargeable under the head "Salaries" shall, at the time of payment, deduct income-tax [***] on the amount payable at the average rate of income-tax [***] computed on the basis of the [rates in force] for the financial year in which the payment is made, on the estimated income of the assessee under this head for that financial year.

now your second concern that AO can disallow exp due to non compliance with tds provisions is also not correct .The fact is that dis allowance under section 40a(ia) is not applicable on salary tds.so even the tds provisions are not complied then also AO is not empower to disallow the expenses.

12 October 2009 Agreed with Gupta ji ,

The deduction of TDS on salary is on"payment basis" and NOT on "credit or payment whichever is earlier "

Hence the question of disallowance doesnt arise

13 October 2009 yes agree with sri rajeev answer

01 December 2009 good



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