The Supreme Court while upholding the decision of Madras High Court has held that under Income Tax Act TDS is deductible on salaries of nuns and priests working in aided schools.
The bench of Chief Justice D Y Chandrachud, Justice J.B. Pardiwala and Justice Manoj Misra have observed that the money is given to the school in the form of a salary grant, therefore it cannot be exempted from TDS.
Background – TDS is deductible on salaries
A single judge bench of the Madras High Court had ruled in favour of the priests and nuns and held that TDS is not deductible on salaries of nuns and priests working in aided schools. The high court judge had said that their salaries cannot be subject to income tax as the money is not accrued to them but only to the diocese.
The Income Tax Department filed an appeal against this order before a division bench of the high court, which reversed this order in 2019.
The order was challenged in the apex court.
Conclusion
The court stated that for example, a Hindu priest said that I would not retain the salary and would give the money for doing puja to an organisation. “But if the person is employed, he gets the salary, tax has to be deducted. The law is common for everybody. How can you say that it’s not subject to TDS?”
The court has dismissed the appeals of 100 dioceses and congregations from Tamil Nadu and Kerala.
Read More: Direct Tax Weekly Flashback: 3 November To 9 November 2024
Case Details
Case Title: Institute Of The Franciscan Missionaries Of Mary Versus UOI
Case No.: Petition(s) for Special Leave to Appeal (C) No(s). 10456/2019
Date: 07-11-2024
Counsel For Petitioner: Arvind P Datar
Counsel For Respondent: Dhiraj Abraham Philip
