Supreme court says no tax at source on tips


In ITC Limited Gurgaon v Commissioner of IT (TDS) Delhi, the Supreme Court recently held that tips received by hotel employees do not amount to salary and hence an employer need not deduct tax at source under section 192 of the Income Tax Act, although tips would be taxable in the hands of the employees as income from other sources. Section 192 states that any person responsible for paying any income chargeable under the head salaries must, at the time of payment, deduct income tax on the amount payable.

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The dispute digest is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at or Readers should not act on the basis of this information without seeking professional legal advice.