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Deductibility of Provision of Performance incentives

1465 views 1 replies

Dear Friends,

In the assessee co.,  performance incentives exgratia are given every year in July for the year ended on previous 31st March based on individual performance of employees, meeting of their respective targets etc. These are in the nature of discretionery ex gratia.

Is provision for above necessary in the accounts for the year ended 31st March ( prior to deciding the quantum etc. in July) keeping in view the accrual concept ?

Secondly, if the provision is so made, will it be deductible as an expense for income tax purposes??

Thanks & Regards

Manoj Aggarwal

 

 

Reg
Replies (1)
HI I think ex gratia is for the last year therefor you have to make provision as a performance reward. in the year you paid it, in that particular year it is taxable in the hands of employee.


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