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.

[rahul gupta]

Ya U R correct. Salary is allowed even if there is no deduction of tds on it. I Think Its a benefit of law. You Can avail it

[DEV KUMAR KOTHARI]

As pointed out by you the disallowance provision not yet cover salary, therefore, salary can be claimed even when there is no TDS or delay in payment of TDS. However, provisions applicalbe in event of failure to deduct or failure to pay tax deducted will apply. Therefore, better deduct and depsoit tax wherever applicable.

AI Summary

TDS disallowance for salary is not covered under section 40(a); employers should still deduct and deposit tax promptly. The disallowance provision targets specified payments (interest, commission, brokerage, rent, royalty, professional or technical fees, and contractor payments) where tax should have been deducted but was not or was not deposited; salary is not included and therefore remains deductible even if TDS is not deducted or deposited, though obligations and penalties for failure to deduct or to deposit tax deducted still apply and employers should deduct and deposit tax where applicable.