TIP taxability

[NAV HIND JAIN]

TIP RECEIVED IN HOTEL LINE IS TAXABLE UNDER WHAT HEAD

Dear Nav Hind, TIP will taxable in the head of teh Business or profession. please write if there is any other confusion in this regard. [email protected]

[Sunil K. Jain]

Technically speaking Tip recd in hotel business is paybale to the staff and is to be credited as receipt and debited in Tips and incentive account. However in case the entire amount is not paid to the staff the diffrence will automatically be shown as part of income in the profit and loss account of the assessee.

AI Summary

Tip taxability in hotels: treated as business income; undistributed tips retained by the employer are assessable.
Tips received in the hotel business are taxable as Business or Profession income. They should be recorded in a Tips and Incentive account with disbursements to staff charged against that account; any portion not paid to staff is treated as the assessee's operating receipt and shown in the profit and loss account as assessable income.