Remittance of Tax Deducted at Source on Salariesing sy

[Srivatsan Krishnamachari]

Dear Gentlemen

A company follows mercantile/accrual Accounting System. Due to some financial problem they are not able to pay salries to cerain grades of employees for a few months. However necessary credit has been given to their accounts in the books and the amount involed has also been accounted for i.e. Total Salary Payable  minus TDS Portion.

Subsequently salary for those months were actually paid and Tax deducted at source to be remitted before the 7th of the month succedin the one in which the salries including arrears were paid.Though salary were credited the actual payment took place now only and so for example 'the salaries say from November 2011 to January 2012 are actually paid now and so if the Deductor (Employer) remit the Tax deducted at source on or before 7th of March 2012 ,there won't be any penalty levied. Is my understanding correct?

I have pasted the relevant portion of the Guidance given by Income Tax Department  in their web site. Hence please let me know whether my understanding  as above said is correct on the lines of the 'Guidance ' quoted from IT web site.

the para typed in red colour is the one taken form IT web Site.

Kindly clarify,

Regards,

K.Srivatsan

2.4 When is tax to be deducted

Section 192 casts the responsibility on the employer, of tax deduction at source, at the time of actual payment of salary to the

employee.  Unlike the provisions of TDS, pertaining to payments other than salary where the obligation to deduct tax arises at the time of credit or payment, which ever is earlier, the responsibility to deduct tax from salaries arises only at the time of payment. Thus, when advance salary and arrears of salary has been paid, the employer has to take the same into account while computing the tax deductible.

2.4 When is tax to be deducted

Section 192 casts the responsibility on the employer, of tax deduction at source, at the time of actual payment of salary to the

employee.  Unlike the provisions of TDS, pertaining to payments other than salary where the obligation to deduct tax arises at the time of credit or payment, which ever is earlier, the responsibility to deduct tax from salaries arises only at the time of payment.

Thus, when advance salary and arrears of salary has been paid, the employer has to take the same into account while computing the tax deductible.

2.4 When is tax to be deducted

Section 192 casts the responsibility on the employer, of tax deduction at source, at the time of actual payment of salary to the

employee.  Unlike the provisions of TDS, pertaining to payments other than salary where the obligation to deduct tax arises at the time of credit or payment, which ever is earlier, the responsibility to deduct tax from salaries arises only at the time of payment.

Thus, when advance salary and arrears of salary has been paid, the employer has to take the same into account while computing the tax deductible.

2.4 When is tax to be deducte

Section 192 casts the responsibility on the employer, of tax deduction at source, at the time of actual payment of salary to the

employee.  Unlike the provisions of TDS, pertaining to payments other than salary where the obligation to deduct tax arises at the time of credit or payment, which ever is earlier, the responsibility to deduct tax from salaries arises only at the time of payment. Thus, when advance salary and arrears of salary has been paid, the employer has to take the same into account while computing the tax deductible

2.4 When is tax to be deducted

Section 192 casts the responsibility on the employer, of tax deduction at source, at the time of actual payment of salary to the employee.  Unlike the provisions of TDS, pertaining to payments other than salary where the obligation to deduct tax arises at the time of credit or payment, which ever is earlier, the responsibility to deduct tax from salaries arises only at the time of payment.

Thus, when advance salary and arrears of salary has been paid, the employer has to take the same into account while computing the tax deductible.

AI Summary

Company Delays Salary Payments; Confirms TDS Remittance by March 7, 2012, Avoids Penalties Under Section 192 A company using an accrual accounting system faced financial difficulties, delaying salary payments to certain employees. Although salaries were credited, actual payments occurred later. The query seeks confirmation on whether remitting tax deducted at source (TDS) by March 7, 2012, for salaries paid from November 2011 to January 2012, would avoid penalties. Section 192 of the Income Tax Act states that TDS on salaries is required at the time of actual payment, not credit. The response confirms the understanding is correct, aligning with the guidance from the Income Tax Department.