TDS ON SEPARATION AMOUNT PAID TO EMPLOYEES

This query is : Resolved

P.S.VISHWANATHAN

P.S.VISHWANATHAN (Querist)
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16 October 2008 WE HAD RETRENCHED A NUMBER OF EMPLOYEES DURING THE YEAR 1998. THE EMPLOYEES PREFERED TO GO TO LABOUR COURT INSTEAD OF ACCEPTING THE MONEY OFFERED(THIS OFFER WAS WELL IN LINE WITH THE LABOUR LAW).
HOWEVER,THEY FINALLY ARRIVED AT A SETTLEMENT WITH US IN THE YEAR 2007 AND WE HAD PAID THEM THE AMOUNT SO SETTLED IN THE LABOUR COURT AND CASES WERE CLOSED.

THE COMPENSATION AMOUNTS PAID EXCEEDED THE TAXABLE LIMIT .WE DID NOT DEDUCT TDS AS WE HAD CALCULATED THE COMPENSATION IN SUCH A MANNER AS IF THEY WERE CONTINUOUSLY EMPLOYED FROM THE DATE OF RETRENCHMENT TILL THE DATE OF SETTLEMENT.THE COMPENSATION PACKAGE ALSO INCLUDED GRATUITY. IF THE COMPENSATION MINUS THE GRATUITY IS DIVIDED BY THE NUMBER OF YEARS(IE.FROM DATE OF RETRENCHMENT TILL THE DATE SETTLEMENT) THEN FOR EACH YEAR SINCE 1998 THE EMPLOYEES WERE OUT OF THE TAX NET. WERE WE RIGHT IN NOT DEDUCTING THE TDS? PLEASE ADVISE.

P.S.VISHWANATHAN

P.S.VISHWANATHAN (Querist)
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16 October 2008 I WOULD BE GR

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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16 October 2008 You have to apply section 10(10B).

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