Notice pay deduction - not excluded from gross salary -

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Abhay Atal (Querist)
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05 May 2013 Hi,
I had left Co. X & the company has paid me F & F of 2,20,000. The notice pay deduction was 76,000 and the company X has credited balance of 1,44,000 into my bank account. It has deducted TDS of 2,000 considering my gross salary of 2,20,000 ( without excluding Notice pay).
I joined Co. Y & it has reimbursed me my Notice pay of 76,000 and included the same in my gross salary.

Let Me know whether the treatment of not excluding Notice pay from gross salary for TDS calculation by Co. X is correct?

CA. Dashrath Maheshwari

CA. Dashrath Maheshwari (Expert)
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05 May 2013 Where salary is paid but taken back either as notice pay or for some other reason, it is not a deduction, but an abatement required to be set off against what is received so that it is only the net salary which is salary. therefore, be right in claiming refund of excess tax deducted by offering only the net salary as income from salaries. The law cannot tax what is not received either as salary or as income. The law has to be interpreted reasonably confining liability to real income. you can reduce your salary equivalent to deduction. and keep your settlement letter where notice pay deduction is mentioned, which may be required in case of scrutiny assessment.

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Abhay Atal

Abhay Atal (Querist)
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06 May 2013 But can I ask my old employer to give me a revised salary statement that excludes the Notice Pay?

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CA. Dashrath Maheshwari

CA. Dashrath Maheshwari (Expert)
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20 May 2013 You have all the rights