TDS u/s 192

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This query is : Resolved

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This discussion clarifies when employers must deduct Tax Deducted at Source (TDS) under Section 192 of the Income Tax Act. The consensus is that TDS liability arises at the time of actual salary payment, not when it accrues. Therefore, for an employee who left in November 2019 but received their full and final settlement in June 2020, the employer should deduct TDS in the financial year 2020-21 and issue the Form 16 accordingly.

A.S.P.

A.S.P. (Querist)

11 June 2020 Respected Experts,

Liability to deduct tax at source by employer arises at the time of actual payment of salary and not at the time of accrual.

If any employee has left the job in the month of Nov-2019 and payment of his Full and Final Settlement is pending from employer up to financial year end i.e. 31.03.2020. However, employer has made provision for outstanding payments on year end.
Actual settlement of Full and Final dues happened in June-2020.

In this case please guide me, whether employer should have deduct TDS also on F&F amount and generate Form 16 accordingly for FY 2019-20.
Or
Employer should deduct TDS on F&F in FY 2020-21 i.e. on actual payment in June-2020 and accordingly issue Form-16 to its employee.

Please revert with your valuable opinion.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

11 June 2020 TDS is deducted at the time of actual payment of salary and not during the accrual of salary.
Employer should deduct TDS on F&F in FY 2020-21 i.e. on actual payment in June-2020 and accordingly issue Form-16 to its employee.

A.S.P.

A.S.P. (Querist)

17 June 2020 Thank You so much Sir...!!!

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