Hi Everybody,
I need a clarification with regard to TDS and the situation is as follows:
One of our employees resinged in the month of March 2010 and as a compensation my company is decided to pay compensation to him around Rs. 3lac but in deferred monthly instalment like Rs.1 lac in April 2010 and next two month accordingly.
As an employer i need to deduct TDS on payment basis i.e.at the month of April/May/June 2010. But as an employee he would be taxable on accrual or payment which ever is earlier as per the salary provisions under Incomfe tax act.
Considering the above facts Will the employee needs to pay tax out of his pocket for the financial year 2009-10 on the compensation amount.
Please some body clarify on this and correct me wherever i am wrong in my thoughts
CAclubindia
