Presentation on Taxation of Salaries

8/10/2019 Presentation on Taxation of Salaries

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THE INSTITUTHE INSTITUACCOUNTACCOUNT(Western Ind(Western Ind

TAXATIO

YCh

Direct Tax Refresher Course, Mumbai

E OF CHARTEREDE OF CHARTEREDNTS OF INDIANTS OF INDIA a Regional Council)a Regional Council)

OF SALARIES

resented by :gesh A. Thar

rtered Accountant

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CHARGING PROCHARGING PROSection 15 Charging

Salary earned by an i.e. Employer-EmploTaxation on due oearlier.Salary paid/allowedthe employer coverePayments from form

Label not conclusiveCIT V. T. Abdul Wahidto employees , also trea


ISIONSISIONS AN OVERVIAN OVERVIProvision

employee from an employee relationship essential.r receipt basis whichev

y non-employer on behaldr employer also covered

& Co.243 ITR 467 (Mad.) [Commied as salary].

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EMPLOYEREMPLOYER EMEMLakshminarayan Ra

Hyderabad (1954) 25 I- What to do + How to- Direct Control and su

Q: Present day HowKlause Vogel:-

- Employer has right to- Employer bears the re

[CIT V. Coastal Power Co. (


LOYEE RELATIONSLOYEE RELATIONSGopal & Sons V. Govt

TR 449 (SC)oervision

far applicable

he work performedative risks & responsibilities.62 Taxman 120)(Del)]

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Contd..Contd..

Substance prevails over forSome Indicators none con

Your instructions (what + hoYou provide training?You set working hours / leaIs there a continuing relation

Do you appoint / superviseYou specify the location of wYou require progress report?You provide infrastructure, tRestrictions on providing serYou have a right to terminateRequirement to pay on time


lusive

+ when) to be followed?e rules?hip?

ny assistants of the worker?rk?

ols, equipment?ices to others?

?asis even if job not accomplished?

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OFFICE OR PLOFFICE OR PLStya Paul V. CIT (116 IT

- Mere some supervisory- The M.D. had powers to

to dismiss him- Hence the M.D. is not a

CIT V. Manmohan Das (- Treasurer of a Bank co- Treasurer to provide staf- He was responsible for

base money/ forged cur


CE OF PROFIT CE OF PROFIT335) (Cal.)

ontrol by the board not conclappoint an additional direct

ervant of the com an .

9 ITR 699) (SC)tract for service, not salary, appoint/remove them

protection of cash/ bad moency.

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ContdContdRam Prashad V. CIT (8

- M.D. employed to manacould be dismissed, or hterminated if work not s

Employee.- Day to day supervision


ITR 122) (SC)ge affairs of the company, heis employment could beatisfactory is an indication o

control not required.

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SALARY PAID ONSALARY PAID ONCase Study I:

Situation 1


EHALF OF EMPLOYER EHALF OF EMPLOYER

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Situation 2- Company B provides

Employee

- Whether taxable as pe- Who should do TDS ?

Situation 3- Assume Company A

where the Employeesis in Delhi

- Would perquisite valperquisite ?


ent free accommodation to t

rquisite Company A or Company B ?

as provided house in Mumb family continues to live whil

e of Delhi house be taxed as

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CASE STUDY IIManufacturingCompany(Maharashtra)

Incentives based on Targets

Com% of

Q: Are these paymentscommission to the Age

Q: Are these paymentshands of Employees ?Q: If Salary Who does

a) Cash b) Motor car c) Forei


Agent (WestBengal)

EmployeesZone 1: Team AZone 2: Team BZone 3: Team C

ission asales

n the nature of additionalt ?

iable to tax as Salaries in th

TDS ?

n Trip

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ACC D ACC D

? (

C . 323 44 233(B )


3 .

. 30,000/ ) ;

(D );C . 207

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ACC DACC DMeaning of salary fo

perquisite value: Excludes perquisites sp Q: whether tax aid b

be included? Held: No. Tax is the obli

perquisite u/s. 17(2)(iv)

AA ( )( )

computation of housing

cified u/s. 17(2); m lo er on behalf of em lo ee is

ation of the employer. Hence


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C A

B &

. 3


: 800

& . 29 543( );

445 ( )

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Meal couponsMeal couponsS. 17(2)(viii) r.w.r. 3(7)(

No perquisite for freprovided by the emplo Through paid vouchers

Not transferable;Usable only at eating joint

[


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KeymanKeyman InsuranceInsuranceKeyman Insurance Policy (KI

Life insurance policy Taken by a person on the lifeGeneral planning used so far:

Employer pays premia; claims

Employer S. 17 (2)(v) NA; employer assigns the policy to

when moneys received on mato be a KIP and S. 17(3)(ii) NA

CIT v. Rajan Nanda 18 taxmanFA 2013 amendment Depolicy even post assignmentQ. S. 37 expenditure irre

PolicyPolicy ) definition 10(10D)

f another (generally employee)

eductions u/s. 37;

the employee; employee pays balance premiurity, claimed exempt by the employee as it.

.com 98 (Del) supports this viewinition of KIP amended to include such

rievably gone?


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TDS on SalariesTDS on Salaries CIT v. L&T 313 ITR 1

S. 10(5) LTC Employer grants exe

employee

mp oyer w e er o Held No. observatiothe employer to obtain

Circular 8 / 2013 dt. 1 Employer should satisfysubscriptions / payment

some important aspecsome important aspec SC)

ption based on self declaration of

n o o a n suppor ng ev encesns that even circular does not req vidences

.10.13 marked difference themselves about actual deposit /by employee


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TDS onTDS on SalariesSalaries (c(cCan employer grant d Circulars u/s. 192 till 20 Circular no. 8/2013 dt. 1 Inter retation?

S. 192 average rate of ta Due diligence by emplo

ntd)ntd) duction u/s. 80G?

12 clear embargo0.10.13 silent

on estimated income u/h salaries

er.


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Expatriate TaxatioExpatriate TaxatioDetermine whether R

If R world income taxservices rendered abroataxable u/s.5

- sa ary or servwhether or not receiveShort stay exemption to Stay < 90 days FC no business in India Salary not liable to deduc

an overviewan overview or NR [S. 6]

ble. Salaries received abroad ford in the year of residence also

es ren ere n n a axa e in India S. 9 employee of FC u/s. 10(6)(vi)

ion from income of the FC in India


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THANK YOUTHANK YOU

Direct Tax Refresher Course, Mumbai une

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Presentation on Taxation of Salaries