Taxation

~~with focus on tax education~~

Taxation of Bonus Paid to Corporate Employees

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A proviso has been inserted in Clause (a)of sub section 2 of section 20 whereby any bonus paid or payable to corporate employees receiving salary income of Rs.One million or more (exculding bonus) shall be chargeable to tax at the rate of 30%. This is a one time levy and payable for the tax year 2010 only, so as to support the Internally Displaced People (IDP)for their rehabilitation.

Example # 1

Salary Income other than bonus = 1,000,000
Bonus amount = 300,000
Tax @ 9% at salary other than bonus = 90,000 (A)
Tax @ 30% at bonus = 90,000 (B)
Total Tax = 180,000 (A)+ (B)

Example # 2

Salary Income other than bonus = 900,000
Bonus amount = 100,000
Total Salary = 1,000,000
Tax @ 9% at salary other than bonus = 90,000 (A)
No Tax @30% at bonus as salary excluding bonus is less than one million (B)
Total Tax = 90,000 (A)+ (B)

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