NOTICE PAY GIVEN AND RECEIVED

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

24 October 2010 WHETHER ANY PAYMENT MADE TO COMPANY BY EMPLOYEE AS PART OF NOTICE PERIOD PAY BE CLAIMED AS DEDUCTION/EXPENSES FROM SALARY INCOME.
SECONDLY WHETHER AMOUNT RECD. FROM NEW COMPANY AS COMPENSATION OF THE NOTICE PERIOD IS TAXABLE IN THE HANDS OF EMPLOYEE

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)
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25 October 2010 See this not a profit in lieu of salary , since this is not for employee benefit, employer is paying the amount for theit own benefit, so that the person can join immediatelly. also this is not the part of pay pacakges.
So , I donot think this should be taxable.

O.D.SHARMA

O.D.SHARMA (Expert)
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25 October 2010 Hi,
This is very simple,Employer u are leaving will deduct notice pay out of your payment & will be reflected in form 16.Again receipt of notice pay will be added to your income,If not paid directly to your employer.

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Pankaj Jhawar

Pankaj Jhawar (Expert)
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25 October 2010 Notice pay receive from the new company at the time of joining will surely be taxable in your hands. The amount which you pay will be deducted from your salary

taxindiaconnect

taxindiaconnect (Expert)
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25 October 2010 The correct situation is that the notice pay receieved from new employer is an income and taxable in the hands of enployee receviing it, while notice pay paid to existing employer on leaving is not deductible.

Pankaj Jhawar

Pankaj Jhawar (Expert)
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25 October 2010 Dear Taxindia connect,

Please quote any case law to substantiate that the notice pay which i pay to the company will not reduce my salary income

Querist : Anonymous

Querist : Anonymous (Querist)

26 October 2010 Dear Friends,
So far receipt on any amount from new employer is concerned we all agree that it is clear cut taxable in the hands of the employee as it is sort of compensation from employer to employee. But so far as payment of notice time pay by employee to company different views are shared by different members. Since employee is any ways making the payment to company from his already earned salary income in past or previous months and no seperate deductions are permissible to salaried emolyees except cleared defined than i think cannot be claimed as deduction by employee. For other members comments pls..

O.D.SHARMA

O.D.SHARMA (Expert)
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27 October 2010 Hi,
There is no need to pay to employer.This will be deducted from your salary/sattlement .Then form 16 will be issued & (if more TDS deducted,Compnay form 16 will show refund0 don't worry you can adjust your TDS with new employer also.
Point is very clear the salary paid in lieu of notice will be net up with total liability.

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