Income tax on incentives

Income has to be considered for tax purpose at the time of accrual or at the time of payment, whichever is earlier. So if the incentive is accrued in FY15 then employer can deduct tax, if applicable.

Originally posted by : Poornima M
	Income has to be considered for tax purpose at the time of accrual or at the time of payment, whichever is earlier. So if the incentive is accrued in FY15 then employer can deduct tax, if applicable.

Thank you fpr the response, but I am no longer the employee of the company, now I am working as a consultant, do you think they can still deduct the tax?

If incentive is paid for last year, then it will be considered as past year's income as your employer would already have made provision for the same last year itself n hence it would be income for last year. Moreover, incentive is paid to you as an employee not as consultant right? Why any prob if considered as income of last year?

Yes there is a prob, I have moved out of India and I believe technically a person residing out of India is not liable for tax

I don't think so, since it is earned when u were employed in India, it is taxable in India only

Does it not matters when the payment is made? 

Actually, tax liability is when the amount is payable or paid, whichever is earlier, in this case since it pertains to fy15, income is accrued last year n hence taxable as income of last year, your employer would give you form 16 for deduction of tax, so it should not be a prob I think

Thanks a lot for the replies and help, highly appreciated