TAX TALK-11.06.2012-THE HITAVADA



TAX TALK-11.06.2012-THE HITAVADA
TAX TALK
BY CA. NARESH JAKHOTIA (Chartered Accountant)
“RECEIPT OF SALARY IS NOT THE CRITERIA FOR ITS TAXABILITY”
Query 1]
The Quarterly TDS certificates are sent by the Companies/Banks by post or courier. But for some reason or other, if it is not received, then involves unnecessary follow up with the companies. To avoid this, can I use TDS-data/information like TAN of Deductor etc reflected in Form 26-AS, for filing Income Tax Return. Please advice in the matter. [vdpankey@rediffmail.co]
Opinion:
Assessee can file the Income Tax return on the basis of TDS credit reflected in Form No. 26AS rather than waiting for the TDS Certificate from the concerned Deductor. Now, the income tax department is also relying mainly on the amount reflected in 26AS for granting TDS Credit to the assessee. However, it is advisable to get the copy of the TDS certificate for record purpose as the option of filing the revised TDS return is always available with the Deductor.

Query 2]
I need some clarification about the Senior Citizen saving account scheme. Last FM Shri Chitambaram in his last or a year earlier brought this scheme/ instrument under 80C is his budget proposal.
Should I conclude that:
1.      The investment & the interest accrued are free of Income tax as covered by section 80C?
2.      Should interest be a part of Income & also be a part of items covered under 80C or a part of section 80C only?
3.      In case of Bank FD' for 5 years, the interest is exempt. Since the investment in this scheme is for 6 years or more, is the interest accrued also exempt from IT?
4.      Whether the interest income from senior citizen deposit account scheme will be subject to tax deduction? [shivdev_gupta@hotmail.com]
Opinion:
1.             Investment in an account under the senior citizens Savings Scheme Rules-2004 is eligible for deduction u/s 80C.
2.             The Interest income on deposit made in the Senior citizen saving scheme is not eligible for deduction u/s 80C.
3.             Interest on specified Bank FD with a 5 years term is taxable (& not exempt as mentioned in the query) Similarly, Interest on amount deposited under the Senior Citizens Savings Scheme, 2004 is also taxable.
4.             Interest payable on the amount invested in the senior citizen deposit account scheme is subject to deduction of tax at source (TDS). Interest payment has not been exempted from deduction of tax at source. (GOI letter F. No.2/8/2004/NS-II dated March 28, 2006)

Query 3]
Kindly guide me in the following matter regarding non payment of salary even after deducting TDS from salary. I have Resigned from the private company after giving one month notice as per agreement/bond & was relieved on 10th of March 2012. Company has deducted TDS from my salary of March-2012 (10 days salary) & did not pay the balance salary (i.e., total salary less TDS).
1.      Kindly guide me whether company has right to hold back the net salary after effecting the TDS payable for the month of March 2012? Is there any provision under IT rule compelling the company to make the payment of balance salary once the TDS is deducted from it?
2.      Also guide me how to file the return as Form No. 16 will show total amount paid but actually not received the above mentioned 10 days salary till date as the TDS is deducted on this 10 days salary of March? [D.R.P. -*_******@yahoo.in]
Opinion:
1.      Basis of charge in respect of salary income is fixed by section 15 of the Income Tax Act-1961. It is chargeable to tax either on due basis or on receipt basis, whichever matures earlier. It may be noted that receipt of salary income is not the criteria for its taxability. 10 days salary is taxable as your income whether the same is received or not. There is no provision in the Income Tax Act that can compel the company to make the payment of the salary even if the TDS is done on that salary.
2.      You have to incorporate the 10 days salary, as reflected in Form No. 16, as income in your income tax return.


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