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Bonus recovered in different fy - how to file for itr

Sandeep Reddy M (Student Others) (27 Points)

20 July 2015

When I joined my company, I received a bonus of 4 Lakhs in October, 2014 for which I paid an income tax of 1.2 Lakhs (30% of 4Lakhs). I am returning that amount in July 2015 to my company (because I resigned from my company, owing to my higher studies and we had an agreement that if I don't stay in the company for a year I will have to return the bonus paid. ). While paying back to my company I need to pay the entire 4L. Now, how do I claim the extra income tax (of 1.2L) paid. My form 16 for the FY 2014-15 has already been generated and cannot be changed. I want this negative 4Lakhs to be reflected in the FY 2014-15 and not the current FY, 2015-16. Please help me out. Thanks.

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6 Replies

Rajagopalakrishnan R (PARTNER) (1422 Points)
Replied 20 July 2015

Get a certificate from the employer stating that bonus has been recovered from you. Or better still get the Part A of Form 16 for FY 2014-15 amemded by removing the bonus from the gross earnings. The refiund of TDS excess can be claimed by filing ITR showing the reduced gross Income. Please not that the adjustment has to be made in FY 14-15 ITR itself. No refund can be claimed in FY 15-16 or reduction claimed against earnings of FY 2015-16

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Sandeep Reddy M (Student Others) (27 Points)
Replied 20 July 2015

Thanks a lot Rajagopalakrishnan. Your response really helps. I have a few more queries.

My company said that they will give me an certificate which states that the bonus has been recovered. But they said they cannot re-issue the form 16, since it has already been generated. I guess they meant form 16, part B . So, Can form-16 part A be amended and be reissued? Is it within the employee rights to demand an amendment in form-16 part A?

Also, once I get the certificate or new form 16 part A, how do we convey to the IT department that the bonus has been recovered. Is there any section where we can specify this? Or should we just reduce the bonus from the income earned? In the second case the IT department doesn't know about the bonus recovery and all they observe is the difference between the form 16 and the declaration I made. Is it an issue?

Thanks,

Sandeep

Rajagopalakrishnan R (PARTNER) (1422 Points)
Replied 21 July 2015

The amount paid shown in part B of form 16 ( which is automatically generated) has no relation to the actual earnings for the year. so you need not worry abt mismatch between your salary income in ITR and amount paid in part B. You can request an amendment in part A which the company should normally give. If they give only a certificate, as I mentioned earlier, just reduce the bonus from gross earnings and file and claim refund of excess tax.

Sandeep Reddy M (Student Others) (27 Points)
Replied 21 July 2015

Thanks Rajagopalakrishnan.

Rishi T (Analyst) (47 Points)
Replied 01 March 2016

Hi,

I need some advice regarding the tax liability on the joining bonus that was paid to me and then taken back. Actually I joined a company and they paid me a joining bonus of Rs.3 lakhs on which they deducted TDS of Rs.92700 at source and paid me the balance which is fine. Now that I left the company and they are are taking back the whole amount (Rs.3 lakhs). I am also OK to pay back the whole amount, but I am requesting them to make sure that the reduce my gross taxable income (income under the head 'Salaries') in my form-16 by the same amount so that I can take refund of the tax which I initially paid on this amount. I am not asking them to pay me back the tax, rather, I will claim refund while filing the return. But for that it should be reflected in my form-16 and form-26AS accordingly.

This is a very simple thing which I am asking them, I am not liable to pay tax on something which is no more my income. Initially they paid me the amount and deducted tax which is fine and now that they are taking that amount back then the tax which I paid on this amount needs to be refunded. But I can only take it they show it in form-16. But they are constantly declining the same and are harassing me on this issue. Its been over month that I have been following this issue with them, but they are not doing it and are just troubling me on this aspect. I am sure I am not asking anything wrong and ideally they should simply do this thing. But on the contrary they are not at all helping me. That's why I am reaching to you for your expert opinion and suggestion that in case they continue to do this and don't reflect that amount in my form-16 then what options are left with me. How can I take the refund of tax that I paid initially on that amount. They say this is application of income, but ideally under this non-self imposed obligation, this cannot be application of income.

Since that 3 lakhs is no more my income, I am not liable to pay tax on that amount. Request you to please help me and provide me with a solution to handle this situation with them. Looking forward to hear from you. Please help and advise.

Regarding reducing the amount while filing return - in that case what I input in the return and the figure in my form-16 from company will not match. And in that case the income tax department can reject my claim. Also will the account statement and/or a letter from company stating they have tken back 3 lakhs from me will be a sufficient proof to provide to IT department in case they call for scruitiny if I file return with reduced amount to get refund.

Can that act as a valid and legal proof to show to IT department? Can I file return by reducing that amount myself which the company refused to reflect in form-16? If yes, then if it comes for scruitny then, can I use the Full & Final statement where it shows I paid back the whole amount (along with the copy of cheque) as a valid proof to support my claim? Please help.

Thanks & Regards,

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Sandeep Reddy M (Student Others) (27 Points)
Replied 02 March 2016

Hi Rishi,

As far as I know, if the company paid the bonus and you returned the bonus in the same financial year, then ideally company should reflect that deducted amount in Form 16. But if these 2 events happened in 2 different financial years, then the form-16 for the first finanical year would have been already generated and the company cannot reflect the deducted amount in form-16.

But in either case, you can claim for the refund by deducting the amount you returned to the company. If the Income Tax Department rejects your claim (most probably this won't happen) or asks for the proofs you can always show the Full and Final Settlement letter or any other equivalent document. It will act as a valid and legal proof.

Thanks,

Sandeep