My client is having a software office. the total turnover is expected to be below 40 lakhs. he is paying salaries of 30,000 and 20,000 per month to 4 employees. should Tds be deducted on these salaries paid. I have a doubt that because the total turnover of the company is below 40 lakhs, the TDS chapter does not apply. Please let me know.
Thanks
Asim Lasani
Dear Asim
As per my knowledge, For deduction of TDS on salary , there are no need to cosider the turnover of the company. Even if the turn over is less then 10LAkh for the previous year the the company is paying taxable salary to any employees . it is the employers duty to deduct TDS on salary
Hi ASIM
1. If your turnover has crossed Rs. 40 lakh in Jan., 2010, you are liable to get your accounts audited u/s 44AB for the F.Y 2009-10. But, TDS provisions will be applicable from the next financial year starting 1st April, 2010.
2. However, Finance Bill, 2010 has proposed to increase the turnover limit u/s 44AB to Rs. 60 lakhs. Hence the limit for tax audit w.e.f 1st April, 2010 will be Rs. 60 lakh. You will be required to comply with the TDS provisions only if your turnover exceeds Rs. 60 lakhs for the year 2010-11 & onwards....
agree with dhiraj
i think TDS provisions has no link with turnover. TDS provisions are governed by separate chapter and if taxable income exceeds basic exemption limit, TDS should be deducted from salary.
| Conditions to be satisfied for applicability of sec.192 | ||||||||
| 1 | Any payment is made by an employer to his employee. | |||||||
| 2 | Such payment must be chargeable under the head salaries. | |||||||
| 3 | Quantum of such payments for the financial year in which such payments are | |||||||
| made exceeds minimum chargeable to tax. | ||||||||
| Stress : | ||||||||
| TDS to be deducted on salaries paid. | ||||||||
| Liability to deduct tax at source should not be determined with reference to | ||||||||
| the sales/turnover.(44AB condition not applicable to sec.192) | ||||||||
Agreed
Can anyone say Which section of IT Act disallows payment of Salary with Non-deduction of tax in computation of income under the head Income from business or profession ?
I think Though Non-deduction will attract penalty under TDS provisions, the assessing Officer cant disallow the expenses.
Comments Please
With Regards
Himansu
Disallowance of salary as expense if TDS not Deducted:-
sec 40(a)(iii) is applicable only where any payment which is chageable under the head Salaries. if paid outside India or paid to a non-resident, and if the TDS has not been deducted
I Agree with Himanshu Sekar,
Under Income Tax Act, it is not mandatory to deductd the TDS from Salary, but with reference to compliance provisions of Act u should deduct & pay the TDS.
Also for answer to question :
First confirm the status of Assessee because u written in last paregraph that the company required to deduct or not. if it is company / partnership firm then it definately required to deduct & pay the TDS.
For individual assessee if he required to get his book of accounts audited U/s. 44AB then tds will be applicable from next financial year.
Rachit
Then What about Salary paid inside india or to a resident
Is there any disallowance provision for the above
TDS on Salary should be deducted if the amount exceeds the basic exemption amount.
Mr. Asim
TDS not required the limit of Rs.40 lakh. coz TDS deducted on the salary of those person whose total income from salary more than 160000.So u can deduct TDS on salary whether your turnover cross the limit of 40lakh or not.
Deduction of tax of employees is based on their salary and not on turnover of company/firm etc. When the employees salary is expected to cross maximum exemption limit applicable to the employee TDS is required to be deducted.
In your case Rs. 30000 or 20000 p.m. salary crosses the maximum exemption limit of 160000 or 180000 so TDS is required to be deducted.
To my seniors : correct me where i am wrong.
CAclubindia
