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Salary income

abhishek (CA FINAL) (274 Points)

12 January 2015

Hi All

My employer has paid salary for 9 months only and the salary for the remaining 3 months( Jan Feb March) was paid along with the salary of April .Now while filing return should i show salary income for 9 months only or should i show it for 12 months but if i show it for 12 months the tax for the last three months becomes payable since it was deducted at source by the employee in the month of April.

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6 Replies

Z ( ) (2960 Points)
Replied 12 January 2015

S.15 The following incom shall be chargeable to income-tax under the head “Salaries” —

(a) any salary due from an employer or a former employer to an assessee in the previous year, whether paid or not;

So this should clearly be shown as your salary. I can understand the predicament here, it is on one hand taxable to employee and he should be self assessment tax thereon and on other hand employer is required to deduct tax at source while making the payment

I was reading an old judgement wherein it was held that advance tax should not be leviable on such accrued income. But there aint many judgement in this regards. Best is to follow S.15 to avoid litigation

Even the Indian Income Tax Act 1922 had similar provision ,w.r.t charging salary to tax on accrural basis

[Erstwhile provision, S.7 of Indian Income Tax Act 1922

The tax shall be payable by an assessee under the head "Salaries" in respect of any salary or wages, any annuity, pension or gratuity, and any fees, commissions, perquisites or profits in lieu of, or in addition to, any salary or wages, which are allowed to him by or are due to him, whether paid or not]

Z ( ) (2960 Points)
Replied 12 January 2015

A misinterpreation

(Going against the intention)

[open for view points]

S.191 States "In the case of income in respect of which provision is not made under this Chapter for deducting income-tax at the time of payment, and [may read as or] in any case where income-tax has not been deducted in accordance with the provisions of this Chapter, income-tax shall be payable by the assessee direct.

So in respect of accrued income

For income under the head Salaries

1.)Provision for deduction of tax exists [S.192]

2.)Income tax is deducted in accordance with the provisions of this chapter [DEDUCTED ON PAYMENT BASIS]

So can It be said that since both the conditions (existance of provision and deduction as per the provision) exists , the assessee do not need to pay self assessment tax in respect of such income ?

abhishek (CA FINAL) (274 Points)
Replied 12 January 2015

hey thank you Z

your view is appreciated, but in my case i havent filed the return yet and the income on which you say the tax does become payable as per sec 15 interpretation , has already been deducted by the employer on payment of the outstanding salary for 3 months.Now can i quote the details of that deduction instead of paying advance tax??

Z ( ) (2960 Points)
Replied 12 January 2015

If it was of Jan-March 2014 , then tax thereon ought to be paid by you. Is it the belated return?

System (If online) will automatically calculate interest u/s 234 A,B,C (despite of the judgement I was talking about, wherein it was held that no advance tax is required and therefore there should be no interest liability u/s 234B and 234 C)

And regarding deduction in month of April for the previous salary, you will have to claim refund , or adjustment in advance tax (if applicable)

For this reason many people do not follow S. 15 and file return on basis of form 16 (which is wrong)

@VaibhavJ (Believe!! Live your dreams!) (33511 Points)
Replied 12 January 2015

Originally posted by : abhishek
	hey thank you Z your view is appreciated, but in my case i havent filed the return yet and the income on which you say the tax does become payable as per sec 15 interpretation , has already been deducted by the employer on payment of the outstanding salary for 3 months.Now can i quote the details of that deduction instead of paying advance tax??

Do you have proof og TDS done by employer from your salary, form 16 or payslip then you an show this in your ITR.

Also whenever employer pays IT to givt they have to show IT under respective financial year, so you will get credit of the same.

Thanks

Rahul (aayindi) (46 Points)
Replied 12 January 2015

interesting topic. need an answer in a line.. 1) tax should be paid for 9 months income pay remaining tax next year. OR 2) tax should be paid for 12 months income, next year dont pay tax for 3 months payment received in month of april.