Disallownace of salary under section 40(a)

[manoj gupta]

Section 40(a) reads as under: Notwithstanding anything to the contrary in sections 30 to 38 the following amounts shall not be deducted in computing the income chargeable under the head Profits and gains of business & Profession: (ia) any interest, commision or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub contractor, being resident... on which tax is deductible and such tax has not been deducted or after deduction has not been paid on or before the due date specified in section 139(1). Query: Salary has not been included in the above sub clause. Does it mean that even if tax is not deducted or after deduction is not paid on salary paid to resident, still there is no disallowance of salary. pls. clarify.

AI Summary

Salary Not Disallowed Under Section 40(a) Even Without Tax Deduction, But Compliance Advised to Avoid Issues. A discussion on a forum addressed the disallowance of salary under Section 40(a) of the Income Tax Act, which specifies that certain payments, such as interest and fees, are not deductible if tax is not deducted or paid. The query raised whether salary is exempt from this disallowance if tax is not deducted or paid. Respondents confirmed that salary is not included in the disallowance provisions of Section 40(a), meaning it can be claimed even without tax deduction. However, they advised adhering to tax deduction and payment requirements to avoid other legal issues.