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Tds on advance salary

Appu Philiph (Kerala) (136 Points)

14 July 2016

If there is any issue -TDS on advance salary not deducted on the advance salary payment date ?

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10 Replies

CA Srujann kumar Reddy (Asst Manager(Internal audit)) (1679 Points)
Replied 14 July 2016

it has to be deducted and paid to the credit of govt

Ajith T S (CA ) (431 Points)
Replied 14 July 2016

Hi,

TDS needs to be deducted on Advance salary payment. TDS has to be paid before due date. Tax has to be paid in the year in which payment is made.

1 Like

Vipin V Nair (CA Article) (24 Points)
Replied 14 July 2016

Hi,

TDS has to be deducted on the date of payment or credit whichever is earlier and to be paid to the govt within the due date,Otherwise it will attract interest levy. Here you have to see whether it has deducted on the payment date.

Appu Philiph (Kerala) (136 Points)
Replied 14 July 2016

Thanks Ajith and Vipin,

But still my doubt is unsolved .

In given cases company deduct TDS on due date of salay ie after 1 month of the advance payment of salary ,

IF there is any issue on TDS is deducted on due date ? if any what are consequamce ?

CA Harshal Totla (Chartered Accountant) (2229 Points)
Replied 14 July 2016

Liability to deduct tax at source shall arise at the time of actual payment of salary and not at the time of accrual.

1 Like

CA Harshal Totla (Chartered Accountant) (2229 Points)
Replied 14 July 2016

Non deduction, late deduction and Late deposit of Tax deducted at sources(TDS) may lead you to face following consequences.
A: Interest on late deduction /deposit of Tax at source.
B :Dis-allowance of Exp , on which tax has not been deducted /deposited u/s 40(a)(ia)
C: Penalty and prosecution.(271C and 276B)

1 Like

prabhat (ca) (21 Points)
Replied 14 July 2016

I think advance salary paid to employees is treated advance so no need of tds

CA Kamal Chawla (MT) (58 Points)
Replied 15 July 2016

It depends on company..how it is showing advance payment in books..
..
If it is shown under employee loan..then no need to deduct TDS at time of payment itself..
.
but if co. is showing same as salary advance then TDS has to be deducted at time of payment only...
.
Although employee has no liability in any of both cases

shabbir chattriwala (student) (30 Points)
Replied 19 July 2016

interst will be chargeable @ the rate of 1.25 & 1.5% for late deduction and late deposit of tax.further you may be levy with penalty of rs 200 per day for non-filing of TDS Return,if any.

CA Srujann kumar Reddy (Asst Manager(Internal audit)) (1679 Points)
Replied 20 July 2016

@ efiler, sir advance salary is different and taking advance from the company is different, here discussion was on salary advance not on employee loans that they take from company,
loans will not be taxed, however loans at less interest rate than outside banks will be taxed as implied interest.

for the context of advance salary, tds has to be deducted