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disallowance

Sowmya.S.Balan (Paid Assistant) (749 Points)

04 September 2010

Dear Friends,

1. TDS is deducted on salary by a company& Tds certicate is issued But after deduction there is taxable salary . Whether any disallowance is required.

2. The company deducts Tds on payment to sub contractors after sep @ 1% on 50000 and 500 Tds deposited into govt. TDS certificate also issued. Actually rate after sep is 2%. How much amount to be disallowed u/s 40a(i)

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2 Replies

PANKAJ SHARMA (ACCOUNTS MANAGER) (79 Points)
Replied 04 September 2010

To the Best of my Knowledge Sec 40a(i) is not applicable on payments related to Salary and there shall not be any disallowance even if TDS of Salary is not paid to Govt. A reporting will be done by CA on 3CD and other reports.

Please correct if found to be wrong.

Vicky (CA, LCS,MCOM,) (136 Points)
Replied 05 September 2010

1.as per sec 40a(ia) exp salary is not covered.....accordingly,there will be no disallowance.....however as per 40a(iii),tds shd be deducted and paid within the time limits prescribed under sec 200 on salary paid outside india or in india to a non-resident to avoid disallowance of expenditure....accordingly will be the answer of ur case

2.in case tds is deducted partially,expenditure will also be allowed in the same proportion in which tds is deducted.accordingly,exp of 25000 will be allowed in ur case.