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Repayment of joining bonus & tax treatment on the same

jomon (Finance ) (43 Points)

06 January 2016

We had paid a certain amount as joining bonus to an employee, since he did not fulfill the condition on signing agreement we recovered the amount. Can we set off the Joining bonus paid and received and not show it in Form 16 as part of Salary income? The amount was considered for tax calculation.

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3 Replies

CA Devesh Bisht (Chartered Accountant) (258 Points)
Replied 06 January 2016

Hello

Refer this link

https://blog.cleartax.in/treatment-of-notice-pay-joining-bonus-recovery-in-your-income-tax-return/

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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,