Taxes on Salary Employee

[Guest]

Dear Experts,

Hope you all are well!

Ram is an employee of some ABC Pvt. Ltd. company. He is highly paid but the work given to him is too much, so he has decided to recruit 2 employees under him at different Rented location. He will be paying directly to these 2 employees, this has got nothing to do with ABC Pvt. Ltd. This will now reduce his work. The new location is on rent and he is paying 20k a month for it.

Now the question is that if he was just and employee, only Income Tax was applicable. But now as he has further 2 employees under him, pls confirm what further taxes will be applicable?

If still there is only Income Tax applicable than will his employees salary and Rent of the location will be deducted from his annual salary and on the balance amount, Income Tax will be applicable?

Pls, advice. Thanks.

[DR.MARIAPPAN GOVINDARAJAN]

The tax will be levied on the total income paid to Sri Ram. No deduction for engaging two persons will not be allowed.

AI Summary

Tax on total income: payments to hired assistants and rented premises are not deductible from salary. Tax is levied on the employee's total income from employment. Payments for engaging other persons and for renting a location are not allowable deductions against his salary; tax is computed on the gross salary paid to him without reduction for those payments.