Monday, May 16, 2016

Tips collected by hotel from customers and paid to employees couldn't be taxable as salary

The Supreme Court of India held that the amount of tip paid by the employer to the employees had no reference to the contract of employment at all. Tips were received by the employer in a fiduciary capacity as trustee for payments that were received from customers which it disburse to its employees for service rendered to the customer. Hence, tips so disbursed to employees couldn't be chargeable to tax as salary and the employer has no TDS liability.

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