tds on salary

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This query is : Resolved

MONALI (Querist)
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06 May 2009 if tds on salary is not paid to the credit of govt. on or before due date, whether salary will be disallowed

taxindiaconnect

taxindiaconnect (Expert)
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07 May 2009 The newly inserted section 40 (ia) provides that any interest, rent, royalty, fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid, shall not be allowed to in the computation of the taxable income of the assessee for the year. The plane reading of the section clarifies that it do not include the payment of salary. Thus even if the salary is paid to an employee without deduction of tax at source, the expenditure on account of salary can not be disallowed in the hands of the assessee. However the assessee would be treated an assessee in default u/s 201 for non deduction of TDS and the interest and penalty provision may follow.

CA.Pujah

CA.Pujah (Expert)
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07 May 2009 No Salary will not be disallowed under PGBP in case of non-deposit of TDS timely.
But there are two cases,
1)If the DDO has failed to deduct TDS then he must ensure that the due tax payable is deposited by the employee in ITO, otherwise he will be liable.
2)If TDS has been deducted but not deposited the penalty/ interest provisions will follow, as the case may be.