The company is receiving a lumpsum amount of money from its customer on successful completion of some projects. We want to distribute this money to the key employees. But the payout must happen in installents, over 2 years. However we want to receive the entire amount in a go from the customers. Assume we receive it in FY 15-16, and we have to payout in FY 16-17 and 17-18, by parts. We want to do this in the most tax friendly way. Our doubts are - Will the entire amount be treated as Profit in FY 15-16 and thus fully taxable to the company and when distributed to employees again taxed 15% (dividend distribution) ; or if we pay as normal bonus the employees will have to pay tax. In either case it is not tax friendly.
Is there any way to make this transaction tax friendly. Basically we want to avoid tax by the company and do the taxes by the emloyees (deduct as TDS based on salary slab).
If that is not an option, what other option is available ?
CAclubindia
