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Tds on dues of deceased person

CA PRASAD KSHIRSAGAR (CA Practice ) (148 Points)

10 April 2014

Dear All

An organisation wants to pay the final dues of the employee who is already expired. Is the TDS applicable to such payment? Kindly reply.

Regds

Prasad

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5 Replies

Income Tax Wala: (Fin. Expert) (Chartered Accountants) (2010 Points)
Replied 10 April 2014

TDS is a liability of organisation that should be fulfill.

it does not make difference for organisation whether employee or whatever has pass away or not.

1 Like

Shudhanshu Agrawal (Business) (2570 Points)
Replied 10 April 2014

Under the income tax act if case of deceased person all his income and income tax liability is passed on to his legal representative. In such a case organisation is required to deduct TDS and deposit it with the department.

SREEVIDHYA (MANAGER TAXATION) (26 Points)
Replied 10 April 2014

To tax income under salaries, employer employee relationship should prevail. Spouse of the deceased is not employee to receive future benefits. He/she receives in the capacity of legal representative of the deceased. So no TDS is deductible

Shudhanshu Agrawal (Business) (2570 Points)
Replied 10 April 2014

Mr Shreevidhya's contention seems to be incorrect. As in this case, amount paid to the legal representative was in the nature of salary of the deceased person. Relationship of employer and employee is considered at the time of tendering services and not at the time of making payment.

The payment will be made in the name of the deceased person as salary by the organisation. In such a situation normal provisions of TDS will be applied by the organisation and payment will be made after deduction of it.

SREEVIDHYA (MANAGER TAXATION) (26 Points)
Replied 12 April 2014

You can't make payment in the name of a deceased person. It should be paid to the legal representative. Once a person is dead, he ceases to be an assessee. You can't pay TDS in the name of a person not in existence. The legal heir cannot be treated as the deceased assessee nor as representative assessee of the deceased. My contention is correct as per provision of IT Act.