U/s 195A Net salary paid to employee & tax borne by the CO.
This query is : Resolved
30 April 2011
A foreign salaried person to be paid salary of net tax. The tax will be paid by the company. Please can anyone provide a formula to calculate the same.
As per sec.195A,where under an agreement TDS is borne by the person by whom the income is payable ,then for the purposes of tax deduction ,such income shall be increased to such amount as would ,after deduction of tax ,be equal to the net amount payable under such agreement . Therefore ,the Indian Company shall deduct the following Tax deducted at source from the salary paid.
Eg.1 Net Taxable Income - Rs. 790524. How do we calculate gross taxable income?
Eg.2 Net taxable Income - Rs. 520000. How do we calculate gross taxable income?
Eg.3 Net Taxable Income - Rs. 2983000. How do we calculate gross taxable income?
As per sec.195A,where under an agreement TDS is borne by the person by whom the income is payable ,then for the purposes of tax deduction ,such income shall be increased to such amount as would ,after deduction of tax ,be equal to the net amount payable under such agreement . Therefore ,the Indian Company shall deduct the following Tax deducted at source from the salary paid.
Eg.1 Net Taxable Income - Rs. 790524. How do we calculate gross taxable income?
Eg.2 Net taxable Income - Rs. 520000. How do we calculate gross taxable income?
Eg.3 Net Taxable Income - Rs. 2983000. How do we calculate gross taxable income?
CA MANOJ GUPTA
(Expert)
30 April 2011
SAY RATE OF TDS IS 10% THEN U DIVIDE 790524 BY 90% AND U WILL GET THE GROSS TAXABLE INCOME
CA MANOJ GUPTA
JODHPUR
09828510543
CA MANOJ GUPTA
JODHPUR
09828510543
30 April 2011
But, Sir how can we say rate is 10%. Net salary - Rs.790524/ what will the tax that the company will pay? Same in the case of 2983000/-?
CA SAURABH GARG
(Expert)
01 May 2011
(1)Calculation of Gross taxable income
=(Income net of Tax X 100)/100-TDS rate
(2)Calculate tax Amount
=Gross taxable income(calculated above) X TDS rete
(3)Net taxable income = (1)-(2)
Now if you want to determine tax rate then you have to know about the country of person (if have PAN) received income and then check tax rate in DTAA.
If person does not have PAN you have to deduct Tax @20%.
You will book you expenditure Gross taxable income and pay net taxable income and deposit tds of Rs. diff of the above.
=(Income net of Tax X 100)/100-TDS rate
(2)Calculate tax Amount
=Gross taxable income(calculated above) X TDS rete
(3)Net taxable income = (1)-(2)
Now if you want to determine tax rate then you have to know about the country of person (if have PAN) received income and then check tax rate in DTAA.
If person does not have PAN you have to deduct Tax @20%.
You will book you expenditure Gross taxable income and pay net taxable income and deposit tds of Rs. diff of the above.
02 May 2011
But, It is net salary falls u/s 192 and u/s 195A. Therefore the DTAA tax rate does not fall into picture. The DTAA oly states with royalty,technical services etc but nothing about salary.
"As per sec.195A,where under an agreement TDS is borne by the person by whom the income is payable ,then for the purposes of tax deduction ,such income shall be increased to such amount as would ,after deduction of tax ,be equal to the net amount payable under such agreement . Therefore ,the Indian Company shall deduct the following Tax deducted at source from the salary paid."
"As per sec.195A,where under an agreement TDS is borne by the person by whom the income is payable ,then for the purposes of tax deduction ,such income shall be increased to such amount as would ,after deduction of tax ,be equal to the net amount payable under such agreement . Therefore ,the Indian Company shall deduct the following Tax deducted at source from the salary paid."
02 August 2025
https://docs.google.com/document/d/1sfltGDMWiu98HljTh_6SRqFw20Ze7b58Qf9e31dYILM/edit?usp=sharing
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