TDS quantum on Bonus Payment

Hi,

We have decided to pay joining bonus of Rs.3 lakh to one of the employee. The total income for FY 2011-12 of the employee is Rs.12.50 lakhs. The total amount of tax liability excluding the bonus payment comes to Rs.8,721 (Rs.1,04,652 / 12 mths). When I am making a payment of bonus on 1st April then how much of TDS is to be deducted?? Whether I should include the Bonus amount and calculate the tax liability on the total income and spread the tax over 12 mths or deduct the TDS seperately on Rs.5 lakhs @ 30%. Please advice 

Replies (3)

add bonus and spread it

If I arrive at the TDS amount after adding Bonus and deduct the same in equal installments for the remaining part of the year then whether the same will be taken as deferrment / late deduction of tax as the bonus amount to which TDS pertains to would have been paid earlier and TDS will be deducted throughout the year. Please clarify.

Le t us change the way u compute TDS amount.

Use this formula.

Tax on Total Income (including bonus)

---------------------------------------------------- x 100

Total Income

This is average rate of tax. Suppose it comes to 10%.

Now every time u make the payment to your EE deduct 10% of the payment.

Payment in the month of April is 50,000. Deduct 5000

Payment in the month of May is 100000 which includes some bonus. Deduct 10,000

This way u can do

 

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