Income Tax_TDS on employee salary contribution
M
(Querist) 08 March 2010
This query is : Resolved
Dear all,
FACTS:
One of the employee of a company dies in an accident in the office premises.
Employees of the company decided to provide one day salary as their contribution to the family of the employee who died in the accident.
Please advice on the TDS and other tax implication on the above transactions in the hands of the employees/company/and the receiving family.
Thanks in advance
Vineet
(Expert) 08 March 2010
The contribution be colleagues does not tantamount to salary, hence question of TDS does not arise.
However, in the hands of recepients i.e. family members of deceased employee, the contributions take colour of gift and therefore become taxable u/s 56 (Amount in excess of Rs 50000/- is added to taxable income). To ensure that no tax liability arises in the hands of recepients, contributions can be planned in such a way that each recepient does not get more than Rs 50,000/-.
Kumar Thadhani
(Expert) 08 March 2010
Contribution received in the hands of receipent employees does not amounts to his salary hence question of TDS does not arises, however it tantamount to gift hence the gifts and hence tax liability by way of gift is taxable.
