Dear All, First of all, Happy New Year to all & God bless all. Our Directors has paid rewards from their own pocket to those employees who have attended the office during Corona Pandemic. Now my question is that whether the said amount is taxable in the hand of an employee? If it is more than Rs. 50,000/- & what will be the tax treatment if it is less than 50,000/-?
From India, Kalyan
From India, Kalyan
Dear Raj Bhagwat,
Any payment made to the employee and if it is shown in the salary slip of the employee then the amount becomes taxable and is liable for the deduction of taxes (TDS) by the company.
If the Directors have paid some money on their own and if this expense is not included in the books of accounts of the company then it becomes a personal matter between the two individuals. Therefore, the company has nothing to do with it. Nevertheless, it is incumbent on the employee to disclose this income while filing the income tax return. Anyway, it is the individual call of the employee in question.
Your query was on the tax liability and it has been answered to. However, it is advisable not to disburse any amount to the employee that does not get reflected in the salary slip. In the formal organisation, all the activities should be official and there is no room for unofficial payments however good intentions of the Directors may be. It sends a wrong message to the employees.
The employees have got the money and they must be happy. To them, the source of income, whether formal or informal, does not matter. The Directors also could be happy because they have earned the goodwill of the staff and they could be enjoying a sense of fulfilment. However, these activities undermine the formal structure of the company. For building a proper organisation's culture, this formal structure is essential.
Thanks,
Dinesh Divekar
From India, Bangalore
7736Any payment made to the employee and if it is shown in the salary slip of the employee then the amount becomes taxable and is liable for the deduction of taxes (TDS) by the company.
If the Directors have paid some money on their own and if this expense is not included in the books of accounts of the company then it becomes a personal matter between the two individuals. Therefore, the company has nothing to do with it. Nevertheless, it is incumbent on the employee to disclose this income while filing the income tax return. Anyway, it is the individual call of the employee in question.
Your query was on the tax liability and it has been answered to. However, it is advisable not to disburse any amount to the employee that does not get reflected in the salary slip. In the formal organisation, all the activities should be official and there is no room for unofficial payments however good intentions of the Directors may be. It sends a wrong message to the employees.
The employees have got the money and they must be happy. To them, the source of income, whether formal or informal, does not matter. The Directors also could be happy because they have earned the goodwill of the staff and they could be enjoying a sense of fulfilment. However, these activities undermine the formal structure of the company. For building a proper organisation's culture, this formal structure is essential.
Thanks,
Dinesh Divekar
From India, Bangalore
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Table showing tax treatment of provident funds.doc