TDS on previous year income

Dear All,

We are remitting Performance bonus to all our employees in this week(8th April 2010). This is relating to 2009-10. Pls advice, do i need to deduct tax according to 2009-10 Or May I remit this payment without considering the employees tax and do the tax planning for 2010-11 seperately (Since the payment is going out to employees in 2010-11). Thanks

 

Regards,

Sahir Basha

Replies (1)

Dear Sir,

There is a slight mismatch in the rules

1)  Salary is taxable on receipt or due whichever is earlier basis.

2)  TDS on salary is to be deducted at the time of payment.

So if this performance Bonus was due as on 31.03.2010, then the safe option is to deduct Tax in terms of FY 2009-10. (Becos it will be appearing in Form 16 for FY 2009-10) 

If this Performance Bonus became due on or after 01.04.2010 then U can treat it in the FY 2010-11..

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