TDS on salary

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

13 April 2011 Facts

For the year ended 31 March 2010, the Company has provided for commission payable to a director. Also the Company has provided for TDS on the commission but not paid the same as the TDS shally be paid under section 192 only at the time of payment of commission.

The Company has paid the Commission in the year ended 31 March 2011. The Company has also paid the TDS during this year.

Has the Company defaulted in the TDS deduction or payment?

Also when shall the commission be liable in the hands of the director?

CA KRISHNA KUMAR DARUKA

CA KRISHNA KUMAR DARUKA (Expert)
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13 April 2011 Your fact about 31.3.2010 is not clear. Please clarify your question again.

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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27 July 2025 This is a good query and involves a nuanced understanding of **Section 192** and TDS timing.

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### 📌 **Facts Recap**:

* Commission to Director was **provisioned in FY 2009-10** (i.e., before 31 March 2010).
* TDS was **not paid in FY 2009-10**.
* Actual **commission payment was made in FY 2010-11**, and **TDS was also deducted & deposited in that year**.

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### ✅ **TDS Deduction Under Section 192 – Salary Head**:

* TDS under **Section 192** must be **deducted at the time of actual payment**, not accrual.
* Since the commission was **paid in FY 2010–11**, deduction and deposit of TDS in that year is **legally correct**.
* Merely providing for commission and TDS in the books in FY 2009–10 **does not trigger liability to deposit** TDS.

➡️ **Conclusion**:
**No default** has occurred in TDS **deduction or payment**. You are in compliance with **Section 192**.

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### 📅 **When is Commission Taxable in Hands of Director?**

* As per **Section 15** of the Income Tax Act, salary (including commission to directors) is taxable on **due or receipt basis**, whichever is **earlier**.
* Since it was **due (provided)** in FY 2009-10, it is **taxable in FY 2009-10** in the hands of the director — even if **received later**.

➡️ **Director must report the income in FY 2009–10**, and claim **TDS credit in FY 2010–11** (year of deduction).

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### ✅ Summary:

| Aspect | Conclusion |
| ---------------------------------------------------- | ------------------------------------------------------------------------ |
| TDS deduction & payment | ✅ Correct (done in FY 2010–11 upon actual payment) |
| Taxability in hands of director | 💡 Taxable in FY 2009–10 (year of accrual) |
| Can TDS credit be claimed by director in FY 2009–10? | ❌ No — credit is allowed **only in year of deduction**, i.e., FY 2010–11 |

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### 💡 Tip:

If this mismatch causes difficulty in TDS credit for the director, consider re-timing accruals or using **Form 26A** to justify credit claims, though it’s best to align timing of accrual and payment wherever possible.

Let me know if you want help drafting a note for the director explaining the tax and credit treatment.

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