Is this violation of tds provisions ?

Friends

A company could not pay salary for month of January on 1st February after recognising the expense on 31/01/16 as has been the practice for last few years due to acute fund shortage and other business reasons.

It debited salary cost on 10/02/16, deducted tax at source on same day and paid salary on 12/02/16.

It will deposit tds deducted on or before 07/03/16.

Will there be any non compliance of TDS provisions under section 192 read with section 201 of Income Tax Act 1961.

Please provide your considered views.

Regards

Dipjyoti

Replies (3)

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

As per the Provision of Section 192 of Income Tax Act

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

Thanks for your valued views.

I have noted the same.

However, it is to be remembered that under section 15 of Income Tax Act 1961 relation to taxation of salary, salary is taxed on due or payment basis whichever is earlier.

Regards

Dipjyoti

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