We are calculating TDS on salary for employees by considering the following components on a presumptive annual basis:
- Gross salary projected for 12 months
- Earned Leave (15 days) estimated and included in taxable salary
- Bonus, which is usually paid in the next financial year but provided for in the current year books
Additionally, earned leave is generally paid in the second last month of the current financial year.
My query is:
- As per Central Board of Direct Taxes guidelines and TDS provisions under the Income Tax Act, is it correct to include earned leave on a presumptive basis for TDS calculation?
- Can we consider bonus on accrual/provision basis for TDS purposes, even if it is actually paid in the next financial year?
- What is the recommended or correct practice for such components while calculating monthly TDS on salary?
Request experts to guide on the correct approach as per law and practical compliance
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