Taxability of notice pay and relocation expenses

This query is : Resolved

M.Ajay (Querist)
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21 December 2007 I have recently taken up a new employment in a new city. The new employer reimbursed the notice pay paid by me to the previous employer. He has also picked up the transportation charges for household goods from my previous city to the new city & brokerage charges for fixing up a house.

Pls clarify on the taxability of these payments? Would they be taxable as they are only reimbursement of expenses incurred?

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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21 December 2007 The new employer if he had paid the notice pay directly to the old employer then the old employer would not have deducted the notice pay from your settlement amount, which implies tax would have already been deducted by the old employer as if no deduction has been made. Under the circumstances, you would be offering in your return of income the entire salary from the old employer(without any adjustment for notice pay). The question of any special treatment does not therefore arise.

As regards the joining expenditure reimbursed, it is no income to you, if it is exactly the same amount you have incurred has been reimbursed.

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)
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06 November 2010 Since the first transaction is between both the employer for their mutual benefit , no tax will be applicable on you.

Income tax is not applicable in case of transfer TA.

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