| Question And Answer | |
|---|---|
| Subject: | Taxation of Salary, bonus linked profits of the company ? |
| Category: | Income-Tax |
| Querist: | Ravi aiftp |
| Answered by: | Chartered Accountant ., Mr . H. N. Motiwalla |
| Tags: | axation of Salary, bonus linked profits of the company |
| Date: | January 16, 2024 |
As per the terms of employment agreement, an employee is eligible to receive a bonus linked to the profits of the company at the end of the financial year (April-March). The employee’s salary income (other than bonus) is Rs. 10 crores. The company determined the bonus payable based on the audited accounts during the Board meeting held on July 10,2023. The bonus was be paid to the employee on July 15, 2023. The employer company deducted tax u/s, 192 by applying a personal tax rate.
Can the employee offer a bonus in his personal income tax return for Financial year 2022-23 basis that the bonus become due to him on March 31, 2023? If yea, how ill this be reflected practically in the Income tax Department’s system and the taxpayer’s return of income.
No, bonus becomes due to employee only on July 10, 2023. Therefore the same will be taxable in the hands of employee in the assessment year 2024/25. Employee can claim TDS in the assessment year 2024/25. S.16 contemplates a tax on salaries which are due, whether paid or not. Even it covers salaries which are paid, whether due or not. Thus Salary paid in advance is assessed in the year of payment, it can not be taxed in later when it become due.
Source: AIFTP Journal November 23