Dear Sir, I am a dealer of automobile company. It is a proprietorship firm. My income tax return is under scrutiny from income tax department. They are telling that I cant give salary to my blood relation above 50 thousand. I give salary to my son of 52 thousand per month. I also cut the tds for that. And the salary goes in his salary account every month. He also pay income tax on the income from the salary which I pay to him. Please suggest what should I do now?
Hii
There is no caping on salary to relative , but salary must be justifiable I.e. you can justify by his qualification , exp etc .
In your case submit reply mentioning his eligibility and comparison with cost effectiveness before his joining and after his joining
Hello Sir,
Ask the Assessing Officer as to where is it stated that you cannot give salary to a blood relation above a particular limit. All it says that the amount should be justified.
So in order to justify the same you can show that your qualified for the role he is handling in your business, which proves that the salary is based on his skill and ability.
You can also support it with the bank statement and TDS certificates.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP
Hi,
1)if he is professionally qualified for the job, then there is no bar as to salary paid to him.
2) if salary paid as per industry standard of that field, then your son is eligible for the salary given.
if you can prove above points then assessing officer should agree with the salary given by the company.
there is no where mention in the income tax about the restriction on the amount of the salary given to relative/ or in blood relations
Dear Sir,
If Income tax officer feels that you are paying excess salary to your relatives, he can disallow the exceed portion. (I.e. 2000 per month in this case)
Now, if you can justify keeping in mind your son's experience and qualification that this salary is not excessive, give your reasoning in written submission.
You can also benchmark your son's salary from naukari.com etc.
Please feel free to call/ revert in case of any doubts
Thanks and Regards
Abhishek Dugar
CA CS B.Com
Dear Sir,
Salary can be paid in the blood relation if such person is working for your business and he is qualified or experienced to render such services. The AO can ask question about the genuinity and reasonableness of such transaction. for more detail yo can contact me on:
CA. Sachin Sinha
+ 91 9891315840
There is no such provision in IT act that you should pay only 50000/-. You can refer to the Act.
