Hello Everyone! Our company has planned to provide incentives to the sales team. So I have some questions regarding it.
1- Is the incentive amount taxable for both the employer and employee? If yes, then what type of tax should we be paying, like TDS or any other?
2- Should incentives be added to gross salary?
3- What will be the minimum taxable amount? Shall the taxable amount be calculated only on incentives or incentives + gross salary?
Please suggest. Thank you.
From India, Pune
1- Is the incentive amount taxable for both the employer and employee? If yes, then what type of tax should we be paying, like TDS or any other?
2- Should incentives be added to gross salary?
3- What will be the minimum taxable amount? Shall the taxable amount be calculated only on incentives or incentives + gross salary?
Please suggest. Thank you.
From India, Pune
Hi
1) Incentives paid to employees are fully taxable and form a part of taxable salary. In the ITR form you shall have to club the amount of incentive under head salary and tax shall be charged at applicable slab rates.
2) Incentive being variable component cannot be added to Gross salary. Incentives are paid subject to achieving the target. Hence it cannot be fixed and cannot be added to Gross salary.
3) Taxable amount depends on the total earnings of the employee including salary ,incentive any other allowances like food allowance paid. After considering the IT exemptions (if employee is under old Regime) taxable income can be arrived at.
From India, Madras
9421) Incentives paid to employees are fully taxable and form a part of taxable salary. In the ITR form you shall have to club the amount of incentive under head salary and tax shall be charged at applicable slab rates.
2) Incentive being variable component cannot be added to Gross salary. Incentives are paid subject to achieving the target. Hence it cannot be fixed and cannot be added to Gross salary.
3) Taxable amount depends on the total earnings of the employee including salary ,incentive any other allowances like food allowance paid. After considering the IT exemptions (if employee is under old Regime) taxable income can be arrived at.
From India, Madras
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.
10 ways to reduce your family's taxes.doc