1. In which form the TDS Certificate should be issued for TDS deducted from various payments ? How TDS will be allowed as per Provisions under the Income Tax Act,1961?
The certificate for TDS deducted from various payments should be issued in Form 16A as per the Income Tax Act. Form 16A is a TDS certificate issued by the deductor (i.e., the person who is making the payment) to the deductor (i.e., the person from whom the tax is being deducted). It contains details of the amount of tax deducted, the nature of the payment, and the name and PAN of the deductee, among other information.
As per the amended provisions of the Income Tax Act, TDS will be allowed as a credit against the final tax liability of the deductee. The deductee can claim credit for the TDS deducted by filing the relevant TDS return and furnishing the TDS certificate issued by the deductor. The TDS credit will be available in the year in which the income is assessed to tax. If the TDS deducted is more than the final tax liability of the deductee, he or she can claim a refund of the excess TDS by filing a return of income.
2. Which assessees are liable to furnish TDS certificate to its deductee with Unique TDS Certificate Number Generated from TIN Central System ?
As per the provisions of the Income Tax Act, all assessees who have deducted tax at source (TDS) from payments made to deductees are required to furnish a TDS certificate to the deductee. However, only certain categories of assessees are required to generate a unique TDS certificate number using the TIN (Tax Information Network) central system. These categories are as follows:
- All corporate deductors: Corporate deductors are required to generate a unique TDS certificate number for each TDS certificate issued by them.
- Government deductors: Government deductors are required to generate a unique identification number for each TDS certificate issued by them.
- Non-corporate deductors who are required to get their accounts audited under Section 44AB of the Income Tax Act: Non-corporate deductors who are required to get their accounts audited under Section 44AB of the Income Tax Act are also required to generate a unique TDS certificate number for each TDS certificate issued by them.
It is important to note that the unique TDS certificate number must be mentioned on the TDS certificate issued by the deductor, and failure to comply with this requirement may result in penalties or other consequences under the Income Tax Act.
3. What is the time limit for issuance of TDS Certificate to deductee?
As per the provisions of the Income Tax Act, the time limit for issuing TDS certificate to the deductee depends on the type of payment and the category of the deductor. The following are the time limits for issuing TDS certificate:
- TDS on salary: The employer is required to issue Form 16 to the employee on or before 15th June of the financial year immediately following the relevant financial year in which the TDS was deducted.
- TDS on payments other than salary: The deductor is required to issue Form 16A to the deductee within 15 days from the due date for furnishing the statement of TDS, which is on or before 31st May of the financial year immediately following the relevant financial year in which the TDS was deducted.
- TDS on rent: The deductor is required to issue Form 16C to the deductee within 15 days from the due date for furnishing the statement of TDS, which is on or before 31st May of the financial year immediately following the relevant financial year in which the TDS was deducted.
It is important to note that failure to issue the TDS certificate within the prescribed time limit may result in penalties or other consequences under the Income Tax Act.
4. Whether an employer can consider the loss under head ” House Property ” of an employee for making deduction of tax at source from salary u/s 192?
Yes, an employer can consider the loss under the head “House Property” of an employee for making deductions of tax at source from salary under section 192 of the Income Tax Act, 1961.
Under section 192 of Income Tax Act, , the employer is required to deduct tax at source from the salary income of the employee after taking into account various deductions, exemptions, and losses under different heads of income, including “House Property”.
If an employee has incurred a loss under the head “House Property” during the financial year, the employer can consider this loss while computing the taxable income of the employee for the purpose of deducting tax at source from salary. The employer can take into account the loss only if the employee provides necessary documentary evidence of such loss, such as a copy of the computation of income tax return filed by the employee or a certificate from a chartered accountant.
However, it is important to note that the employee can claim the loss under the head “House Property” while filing the income tax return and may be able to carry forward the loss to future years.
5. Whether tds is required to be deducted from the payment made to employee in respect of compensation in case of wrongful termination of employment?
As per the judgment of the Supreme Court in the case of All India Reporter Ltd. v. Ramchandra D. Datar (2006), TDS is not required to be deducted from the payment made to an employee in respect of compensation for wrongful termination of employment.
The honorable Supreme Court held that such compensation is not in the nature of income and therefore, it cannot be subjected to TDS. The court further observed that the compensation paid to the employee for wrongful termination of employment is in the nature of damages or compensation for breach of contract and does not have the character of income.
It is important to note that this judgment is applicable only in cases where the payment is made as compensation for wrongful termination of employment and not in other cases where TDS may be applicable as per the provisions of the Income Tax Act. Therefore, in cases where there is doubt about the applicability of TDS, it is advisable to seek professional advice from a qualified tax expert.
6. Whether a statement for perquisites is to be given by the employer to an employee U/s 192 of Income Tax Act, 1961 ?
Yes, as per section 192 of the Income Tax Act, an employer is required to provide a statement of perquisites to the employee along with the Form 16 at the end of the financial year.
The statement of perquisites should contain details of all the perquisites received by the employee during the financial year, such as rent-free accommodation, motor car facility, club membership, medical reimbursement, etc. The value of perquisites should be calculated as per the prescribed rules and guidelines.
The perquisites received by the employee are treated as taxable income and are subject to tax deduction at source by the employer. Therefore, it is important for the employer to provide an accurate statement of perquisites to the employee to enable the employee to compute his/her taxable income and file the income tax return accordingly.
In case the employer fails to provide a statement of perquisites to the employee, the employee may face difficulty in computing his/her taxable income and filing the income tax return, which may lead to penalties or other consequences under the Income Tax Act.
7. Whether an employer is required to verify that the employee had actually utilised the amount paid towards leave travel concession or conveyance allowance U/s 10( 5 ) of the Income Tax Act for determining the tax deduction at source?
As per the judgment of the Bombay High Court in the case of Larsen & Toubro Ltd. v. Joint Commissioner of Income Tax (2008), an employer is not required to verify whether an employee had actually utilized the amount paid towards leave travel concession (LTC) or conveyance allowance for determining tax at source under section 192 of the Income Tax Act. Further the Honorable Apex court in the case of CIT Vs. Larsen & Toubro Ltd. (2009) 313 ITR1 (SC), held that the employer is not under any statutory obligation under the Income Tax Act,1961 or the rules, to collect evidence to show that the employee had actually utilized the amount paid towards leave travel concessions or conveyance allowances U/s 1095) nor is there any circular of the CBDT ( Central Board of Direct Taxes) requiring the employer U/s 192 to collect and examine the evidence supporting the declaration submitted by the employee.
The court observed that the employer is not responsible for verifying the actual utilization of the amount paid as LTC or conveyance allowance by the employee. The employer is only required to deduct tax at source on the amount paid as per the prescribed rates and guidelines. The court further held that the responsibility of proving the actual utilization of the amount paid as LTC or conveyance allowance lies with the employee.
Therefore, an employer can determine the tax liability of an employee under section 192 based on the amount paid as LTC or conveyance allowance, without verifying the actual utilization of the amount by the employee. However, the employee is required to maintain adequate documentation and proof of the utilization of the amount, in case of any scrutiny or inquiry by the tax authorities.
It is important to note that this judgment applies only to cases of LTC and conveyance allowance and may not apply to other allowances or perquisites where verification of actual utilization may be required for determining the tax liability.
8. Whether honorarium paid to part time teacher is a salary ? Is TDS deductible from Honorarium U/s 192 of Income Tax Act, 1961.
The term “salary” typically refers to a regular payment made to an employee for their work. Honorarium, on the other hand, is usually a one-time or occasional payment made as a token of appreciation or recognition for services rendered.
In the case of part-time teachers, the payment made to them can be considered as an honorarium if they are not regular employees of the institution or organization. However, if they are regular employees and receive a fixed payment for their work, then the payment can be considered as a salary.
Regarding TDS deduction on honorarium, Section 192 of the Income Tax Act, 1961 deals with the TDS deduction on salary payments. As honorarium is not a regular salary payment, it may not be covered under Section 192. However, if the honorarium paid to a part-time teacher is substantial and the teacher is not able to prove that it is a one-time payment, then TDS may be applicable.
The case of CBDT v/s Aditya V. Birla relates to the tax treatment of commission payments made to directors. It is not directly related to honorarium payments made to part-time teachers. Therefore, the ruling in this case may not be applicable in determining the tax treatment of honorarium payments.
9. Employee of a Japanese company is working for the Assessee in India. Japanese Company paid salary to their employees. Whether Assessee in India, where such a person is working, can be penalized for non deduction of TDS on Salary paid to their employees ?
The liability for deduction of TDS on the salary paid to an employee of a foreign company working in India depends on various factors such as the residential status of the employee, the duration of stay in India, the nature of work performed, etc.
In the case of CIT v. Indo Nissin Foods Ltd. (2017), the Karnataka High Court held that if the Japanese company is not having any business connection or permanent establishment in India, and the employee is not a resident of India as per the provisions of the Income Tax Act, then the Indian company cannot be held liable for non-deduction of TDS on the salary paid by the foreign company to its employee.
However, if the Japanese company has a permanent establishment or business connection in India, and the employee is a resident of India, then the Indian company may be held liable for non-deduction of TDS on the salary paid by the foreign company to its employee.
Therefore, the liability for deduction of TDS on the salary paid to an employee of a foreign company working in India depends on various factors, and the specific facts and circumstances of the case will determine whether the Indian company can be penalized for non-deduction of TDS.
10. Whether Tax has to be Deducted at Source in case Salary due to a deceased person is paid to his legal heir?
According to the provisions of the Income Tax Act, 1961, tax has to be deducted at source (TDS) on the payment of salary made to an employee. However, in case of a deceased employee, the payment of salary to the legal heir may not be considered as a payment of salary for the purpose of TDS.
In the case of Sreemati Usharani Roy Choudhary, the Calcutta High Court held that the payment made by an employer to the legal heir of a deceased employee in lieu of the salary due to the deceased employee cannot be considered as a payment of salary for the purpose of TDS. The court held that the legal heir of the deceased employee is not an employee of the company and the payment made to the legal heir is not a payment of salary but a payment made on compassionate grounds.
Therefore, it can be inferred that tax may not be required to be deducted at source on the payment made to the legal heir of a deceased employee in lieu of the salary due to the deceased employee. However, it is advisable to seek professional advice and guidance from tax expert or tax consultant on the specific facts and circumstances of each case.
11. Whether Furlough pay or pay during leave of absence is taxable under the head “Salaries ” and Whether TDS is required to be deducted ?
Furlough pay or pay during leave of absence is generally considered as part of the salary of an employee and is taxable under the head “Salaries” as per the provisions of the Income Tax Act, 1961.
In the case of Grindlays Bank Ltd. v. ITO (1980), the Calcutta High Court held that furlough pay is a part of the salary of an employee and is subject to tax under the head “Salaries”. The court further held that the fact that the employee was not rendering services during the period of furlough does not affect the taxability of the furlough pay as it is a payment made to the employee as a condition of service.
Therefore, it can be inferred that furlough pay or pay during leave of absence is taxable under the head “Salaries” and is subject to TDS deduction as per the provisions of the Income Tax Act, 1961. However, it is advisable to seek professional advice of tax consultant and guidance on the specific facts and circumstances of each case.
Whether a short deduction of TDS U/s 192 of Income tax Act, can be adjusted in the subsequent month?
As per the provisions of Section 192 of the Income Tax Act, 1961, an employer is required to deduct tax at source (TDS) from the salary payable to an employee at the time of payment or credit, whichever is earlier. In case of short deduction of TDS, the employer is liable to pay the shortfall along with interest under Section 201 of the Income Tax Act.
However, in the case of Enron Expat Services (AAR No. 807 of 2009), the Authority for Advance Ruling held that the shortfall in the deduction of TDS cannot be adjusted in the subsequent month. The AAR held that the provisions of Section 192 do not provide for adjustment of TDS in subsequent months and any shortfall in TDS deduction has to be paid along with interest as per the provisions of Section 201.
Therefore, it can be inferred that a short deduction of TDS U/s 192 cannot be adjusted in the subsequent month and the employer is liable to pay the shortfall along with interest as per the provisions of Section 201 of the Income Tax Act, 1961. It is advisable to seek professional advice and guidance from a Practicing Chartered Accountant in Delhi on the specific facts and circumstances of each case to determine the appropriate course of action.
The taxability of the reimbursement of air ticket fare to a non-resident employee of a foreign company by an Indian company would depend on the nature of the payment, the residential status of the employee, and the provisions of the Income Tax Act, 1961.
In the case of Cloth Gummiwerke AG v. CIT (1997), the Andhra Pradesh High Court held that the reimbursement of air ticket fare to a non-resident employee of a foreign company by an Indian company can be treated as a taxable perquisite in the hands of the non-resident employee if the expenditure incurred by the Indian company is in the nature of a perquisite or benefit arising out of the non-resident employee’s employment in India.
Further, if the payment is to be made net of tax, then the tax will have to be grossed up. This means that the amount of tax that is required to be deducted will have to be added to the payment so that the employee receives the full amount of the payment after tax deduction.
It is advisable to consult tax consultant or Practicing Chartered Accountant to seek professional advice and guidance on the specific facts and circumstances of each case to determine the taxability of the reimbursement of air ticket fare to a non-resident employee and the grossing up of tax.
