Tds on bonus

Hi Suvidha, You cannot tax the employee for the Provision for bonus accounted in books of accounts. TDS on Salary arises only at the time of payment.

Also note that at the time of payment, full tax to be deducted on the Bonus Amount and it cannot be deferred for remaining months.

Regards

Pradeep s

Dear Pradeep ji,

Thanks for the reply. Your reply is suporting my view point. I am fighting for the same reply that the tax on bonus has to be deducted in one go and cannot be deferred. But I have no document/ case law/ notification/ department's explanation in the support. i shall be obliged if you can supply anything/ forward any link or legal opiniojn in this regard. Thanks again

Regards

CA. Suvidha Gupta

Hi Suvidha,

I am not able to locate any case laws on this, however there is a clarificatory note in Income tax website https://www.incometaxindiapr.gov.in/incometaxindiacr/contents/tpi/TDS%20on%20Salaries.pdf

Para 2.5.2 talks about Average Rate of deduction on the basis of estimated Salary for the financial year. It is well accepted interpretation in Industry that Other than Bonus, all other components of Salary are well known in advance and hence Average Rate of deduction is applied, i.e. equal deferment for 12 months but Since Bonus is declared and paid at one go, it is logical to interpret that it is not an estimation rather real payout for which tax needs to be deducted at one go.

Will still seach case laws/judgement for you.

Also read this article, will be useful for you - https://www.rediff.com/money/2006/jul/10spec1.htm

Regards

Pradeep S