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8/10/2019 Presentation on Taxation of Salaries
1/19
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
une
8/10/2019 Presentation on Taxation of Salaries
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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
Direct Tax Refresher Course, Mumbai
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].
une
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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. (
Direct Tax Refresher Course, Mumbai
LOYEE RELATIONSLOYEE RELATIONSGopal & Sons V. Govt
TR 449 (SC)oervision
far applicable
he work performedative risks & responsibilities.62 Taxman 120)(Del)]
une
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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
Direct Tax Refresher Course, Mumbai
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?
une
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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
Direct Tax Refresher Course, Mumbai
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.
une
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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
Direct Tax Refresher Course, Mumbai
ITR 122) (SC)ge affairs of the company, heis employment could beatisfactory is an indication o
control not required.
une
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SALARY PAID ONSALARY PAID ONCase Study I:
Situation 1
Direct Tax Refresher Course, Mumbai
EHALF OF EMPLOYER EHALF OF EMPLOYER
une
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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 ?
Direct Tax Refresher Course, Mumbai
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
une
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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
Direct Tax Refresher Course, Mumbai
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
une
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ACC D ACC D
? (
C . 323 44 233(B )
Direct Tax Refresher Course, Mumbai
3 .
. 30,000/ ) ;
(D );C . 207
une
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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
8/10/2019 Presentation on Taxation of Salaries
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C A
B &
. 3
Direct Tax Refresher Course, Mumbai
: 800
& . 29 543( );
445 ( )
une
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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