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Income earned in march falls under which financial year

chanakya (Teacher) (182 Points)

08 February 2010

Govt. employees usually calculate tax on the salaries from Mar(Payable in Apr) to FEB(payable in Mar). suppose an employee receives salary in march say ,Mar 21st,2010 should it be included in the returns filed in the A.Y.2010-11 or 2011-2012? please clarify this because the treasury authorities take IT particulars in FEB itself . That leads me to think that income earned in March is considered as the income of the next financial year.

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14 Replies

Amir (Learner) (4016 Points)
Replied 08 February 2010

Dear Chanakya,

Salary is taxable on receipt or due whichever is earlier basis...

Therefore salary of Mrach 2010 will be taxable in the FY 2009-2010 even if it is received in april, may, etc or infact even if it is not received at all..

1 Like

chanakya (Teacher) (182 Points)
Replied 08 February 2010

Then is it not wrong to calculate the final tax in february itself without having any idea whether any income would come in march?

Amir (Learner) (4016 Points)
Replied 08 February 2010

Dear Chanakya,

Obviously actual state of affairs will be available in/after March only...But then there are provisions of Advance Tax & TDS as well, which requires one to compute/estimate his Income before the end of Financial Year..

Ratan Deep Saxena (Asstt Manager (Accounts & Finance)) (2998 Points)
Replied 08 February 2010

Yes, Salary will be taxable on received or due basis, whichever is earlier. Salary for the month of march though received in april still wil be added to salary for the period upto march of the same financial year. For Ex, salary of Rs. 10000/- in respect of march though received in april bt for taxation purpose same would be added in the month of march.

regards,

ratan

1 Like

S. KARMAKAR (Senior Accounts Officer) (30 Points)
Replied 12 February 2010

The question is asked from the Government Employees’ perspective. In Central/State Government organization/PSU/PSE salary of March never drawn in March. In Rule 64 of the Central Government Account Receipts and Payments Rules,1983 and also in Rule 217 of Central Treasury Rules it is clearly stipulated that the salary of March shall be paid on the first working day of April and further stipulated that the Govt. may, in special cases, relax any of the conditions specified in this Rule. This is the standing order. The question of drawing salary of March on 21^st March, 2010 does not arise except in the case of drawl of pay advance or leave salary advance. As such for all purpose the salary of March in Government organizations is due and receivable/payable on or after 1^st April. In view of this Ruling the salary income of all categories of Govt. employees i.e. from lowest category say clerks to Secretary level officers and even the Commissioners of Income Tax salary is calculated by taking into account of Pay of March paid in April(beginning month of the financial year) to salary of February of the Financial year. In addition to this amount any amount defined as salary due and receivable upto 31^st March are accounted for as salary income of that FY.

Sandeep Himatsingka (SCM-Head) (85 Points)
Replied 15 May 2012

How the delayed salary received (April against salary of March) should accounted in Tally?

Please elaborate by giving ledger/group names.

RISHA BHANDARI (Article) (25 Points)
Replied 16 May 2012

Income earned in March falls in that financial year in which it is due or recieved whichever is earlier

Tejas Jain (Chartered Accountant) (314 Points)
Replied 16 May 2012

Salary Receivable A/c Dr ( Loans and Advances (Asset))

To Salary A/c ( Direct Income)

raghav (MBA-(HONS)FINANCIAL SERVICES) (25 Points)
Replied 16 May 2012

Dear Chanakya,

The salary would be taxable in the period of receipt or due which ever is first.

Sandeep Himatsingka (SCM-Head) (85 Points)
Replied 16 May 2012

Tejas,

How to account in tally PTax cut by co. @ 200=00 per month all months throughout totalling 2500=00 in 2011-12?

Which Group? Pls elaborate by example of a salary break-up/

Sandeep Himatsingka (SCM-Head) (85 Points)
Replied 16 May 2012

How to acct Ptax cut by co. @ 200=00 pm totalling 2500=00 for 2011-12 in Tally? & How to reverse after getting Form 16

Please elborate by giving salary brea-up.

I am a salaried employee.

Sandeep Himatsingka (SCM-Head) (85 Points)
Replied 18 May 2012

Pls someone reply my query pointwise. I hv to account in Tally.

Thanks in advance.

Tejas Jain (Chartered Accountant) (314 Points)
Replied 18 May 2012

Bank A/c dr

Professional Tax A/c Dr (Loans & Advance (Asset))

To Salary A/c

at the end of the year

Salary A/c Dr

To Professional TAx A/c

Because at the end of the year you will get the deduction of professional tax from the Salary Income so It will not be treated as the income..

Jayashree Madhavan (Government servant) (22 Points)
Replied 20 July 2018

Sir, I have another doubt. If the IT accounting for govt employees is from Mar-Feb (because rule 64 of GoI Account Receipts and Payments Rules 1983, makes the due date as April1), then what about the corresponding DA arrears for Jan-Mar which are paid out only in April? Should the Jan and Feb arrears be spread out and added to the salary of the corresponding months, and that for Mar be paid for the next financial year only along with the corresponding salary?
Thanks in advance