New Delhi, February 3, 2017

This would be mandatory for availing tax credit; it does not apply to individuals

Businesses and professionals could soon have to pay salaries of Rs 10,000 or more to their employees through cheque or bank transfer if they want to claim tax credit, reported the Times of India on Friday.

According to the report, this is part of the government's focus on moving towards a less-cash economy.  However, this would apply to businesses and not individuals.

"Wages of people such as drivers or office boys are often Rs 10,000 or Rs 15,000, which used to be paid in cash. We will prefer it to go through non-cash channels. The person claiming it as expenses should make the payment by cheque or through digital means to claim tax deduction. This applies to firms and businesses and not to individuals," a tax department official said, according to the national daily.

On Thursday, Union Labour Minister Bandaru Dattatreya had said that his ministry would seek the passage of the Amendment Bill to the Payment of Wages Act in the Parliament for allowing business and industrial establishments to pay salaries to their workers through cheques or electronic modes.

The government had, in December last year, issued an Ordinance which will enable the Centre and states to classify industries and establishments that will have to pay wages to workers through either cheque or by crediting it to their bank accounts.

"Amendment to Payment of Wages Act will be introduced in the Parliament. So far, wages to workers are mostly paid in cash or kind. Most of the workers get their salaries in cash. There is scope that workers may be exploited with this system. They mention one figure in the salary register and the salary they actually get is different. Trade Unions have been asking the Government to control such practices," Dattatreya told PTI.

[The Business Standard]