Are you working in accounts department and responsible for making the employee salary each month? Do you know, a statement about information regarding salary payment under section 108 shall be submitted each year?
Every person responsible for making any payment under the head “salaries” shall furnish a statement to the Deputy Commissioner of Taxes (DCT). This statement shall be prepared in the prescribed format and shall be submitted to the tax circle before the first day of September each year.
Provided that the DCT may extend the date for the delivery of this statement.
We have discussed about two monthly statements on Tax Deducted at Source (TDS). One, tax deducted from the salary disbursement and another is all TDS information other than TDS on salaries. If you have missed it, then please read the article to know everything about two monthly statements on TDS.
Today, we will discuss all about information regarding salary payment under section 108 which also include the information of TDS on salary payment during the year. So, it is very important for you to know how to calculate TDS on employee salaries.
Where you will get the prescribed format?
The prescribed form is provided under rule 23 where the following information shall be provided to the tax authority.
- The name and address of every person to whom the payment as salary has been made or was due during the preceding financial year;
- The amount of payment made, or due;
- The amount deducted as tax from salary;
- Other particulars as may be prescribed.
The above information shall be provided in the table. You may prepare the table as provided under rule 23 into excel sheet which will help you in future by only editing where applicable. There are three parts in the above prescribed format. You may skip information which are not applicable for your company.
Part I: Details of the payments made to employees
This part is long which consist 20 column and you have to provide the information of the employees who have TIN. The amount of salary including all kinds of benefits disbursed to employees during the financial year, investment allowance consideration as per tax law and amount of tax rebate on such investment allowance shall be provided in this part. After considering all the benefits provided to the employees, how much tax was deducted and deposited to the government treasury shall also be provided in this part.
As the information regarding salary payment shall be submitted before the 1 September, so it will be wise to start the preparation after the year end of June. The year end audit will also start after the June and auditor may ask your salary payment summary for the year including tax deducted on taxable employees.
So, if you prepare this statement after June, it will help you in both ways, for audit purpose as well as tax filing to your tax circle.
Part II: Payment made to the employees’ not having twelve-digit TIN and payment made to foreign employees
This second part is short but divided into two separate tables. First table consist the employee salary information who has no TIN. If any employee salary is below the tax-free limit then he does not require to obtain TIN except few exceptions.
You may know that there is a certain limit for making salary payment is cash which is BDT 15,000. If your company disburse any salary to the employees exceeding such amount then total amount shall be disallowed during the assessment of corporate tax which means tax at 32.5%. so, be careful during salary disbursement in cash.
In first part, we have provided the salary information for the employees who have TIN and in this second part, we will provide the payment made to the employees not having TIN. You have to calculate a ratio here about how much percentage you have disbursed to the employees not having TIN by dividing the total salary payment to the employee during the year.
Second table of this Part II is about salary payment to foreign employees. If your company has no foreign employee then this part is not applicable for you, so skip this portion.
If your company has foreign employees then you have to provide again the ratio in the same manner as discussed above.
Part III: Details of cash reimbursement made to the employees in addition to the amount mentioned in Part I
This last part is about cash reimbursement made to the employees in addition to the amount which we have provided in the first part of this statement.
Sometimes, employees travel outside for office purpose and provided the expenses as per company policy. Advance against travel or other expenses are given to employees and adjusted after the return from the travel or incurred of the expenses. Such cash disbursement shall be provided here. Though, most of the companies disburse the amount to the employees’ bank account or issue account payee cheque and in that case this part is not applicable for you. So, skip this part.
Now, we know all about information regarding salary payment under section 108. Where you will get the prescribed format, discussed part by part how to prepare the statement. But if any organization fails to submit this statement then have to face penalty.
What is the penalty for failure to submit this statement?
As per section 124, where any person has failed to file or furnish statement under section 108 without reasonable cause then the Deputy Commissioner of Taxes (DCT) may impose penalty.
The amount of penalty shall be at 10% of tax imposed on last assessed income or BDT 5,000, whichever is higher. In addition to that a further penalty of BDT 1,000 for every month or fraction which default continues.
To avoid the penalty, prepare the statement before the deadline and submit duly. You have to prepare the salary statement each month. So, if you link your monthly salary statement with this statement then it will be very easy for you at the year end.