Tax Query

If the Tax is not deducted at source but the employer bornes the tax liability by making payment of tax (which is due to be paid by the profesional) directly to the professional or by depositing tax of the professional on behalf of such professional (in the name of professional) then there wont be any TDS to claim, instead the tax borne by the employer will be included in the Income of the professional.

One more thing should be kept in mind that the employer cannot escape from the liability of deducting tax at source from the professional fees paid by him, if he is so liable to deduct under income Tax Act.

In the present case the employer is taking on libility to pay tax but that does not mean the employee can escape tax rigours. The gross amount (fee + tax) shall be held as employee's income and tax levied accordingly.

I concur with Mr Bajaj that the employer has to deduct TDS and therefore TDS certificate need to be issued to the employee. The employee can avail credit for such TDS in its return.

no, Mr. bajaj...

Your contention is not valid...

The tax paid shall be included in the income of the Profesisonal...

The payer shall be required to deduct the tax on Total(fees plus tax)..

and payer shall forward a tds certificate....

If 10,000 was paid as gross amount...

then income of professional =10000 / 79.4%            (100-20.6 = 79.4%)

i.e. 12,594

tds on 12594 = 12594 x 20.6% = 2594

Payment = 10000

tds 2594

Dear Saurabh If u had read my above reply properly u should have noticed I have allready replied that which u r trying to explain with an example.

  "the tax borne by the employer will be included in the Income of the professional."

"the employer cannot escape from the liability of deducting tax at source from the professional fees paid by him, if he is so liable to deduct under income Tax Act."

with due regard to ur caliber mr. bajaj, i had no intention to hurt you...

it's just that i misinterpreted your statement being in hurry..

and i regret for that...I am really sorry..

It's a nice gesture Mr Bansal.

Let's resolve to constructively add to views of other Ld members and be more cautious in future.

for sure mr. vineet

I fully agree with the opinion expressed by Mr Bajaj.

The employer is under no way can excape from the liability and the professional person is also liable to include the amount of tax part as has been cited with figure by Mr Saurabh.

i am appointed by govt of rajasthan  as CONSULTANT on contract basis. I  recieve honerioum of Rs.8000/-P.M. department contracted  me full time CONSULTANT.my Gross annual income is 12*8000=96000 Rs. but Dept. is Deduct  TDS @10% rate but my income is less then 150000(Tax free slab) .plz advise me is it right 

The department is not right in deducting TDS as it is below minimum. However you write to the department that my income is below taxable minimum. Also you can file Form 15H for not deduction of tax to the department

The deaprtment is perfectly right in deducting TDS @10% u/s 194J of the Act as total fee for professional service during financial year exceeds Rs 20,000/-.

You cannot submit form 15H as suggested by Mr Giri as the provisions for Non deduction of TDS u/a 197A are not applicable in your case. However, you can apply to assessing officer and obtain a certificate u/s 197 for lower or Nil Deduction of TDS in your case.

thanx  Mr. Vineet  for advice

Thanx Mr. V.V.GIRI for advice