Salary Paid by Employee as compensation to company

932 views 7 replies

 

A Employee has left the company in the first month of the notice period (total notice period - 3 Months) and paid compensation to the company for two months salary.

I would like to know about the accounting and taxation effect on Employee (including for Form 16A) and also on the company.

I meant can the employee claim the salary paid to the company as deduction under any section of IT Act?

Replies (7)

 

no, he can not claim any deduction under the income tax

 

no, he can not claim any deduction under the income tax

Thanks and any more views are invited.....

Hi,

This is my Opinion and please correct me if i am wrong

When an employee gives salary it comes to forgoing of salary so it is taxable as per provision but if the same is surrender of salary then it is an application of an income so it allowed as deduction

Regards

Narayan

Hi

There is two sitituation:

First: If employee resigns from the duties and need to pay notice period then such salary is still be taxable for employee and no deduction is allowed.

Second: If employee is send on Secondment by an employer and by virtue of agreement of secondment employee has to give back earning for specified period then that can be calim as deduction or negative salary.

 

Thanks

Hemant

Originally posted by : tarkeshwar

 

no, he can not claim any deduction under the income tax

 

It should be taxable unnder the head of salary of employee... cause forgone of salary is taxable..

It is not a surrender of salary..

Deduction can't be available to any one..

What if Notice pay is for eg. Rs. 33000/- of which Rs. 26000/- is towards return of joining bonus and balance is salary paid as notice period was not served... Can a salaried person can deduct Rs. 26000/- bonus paid against bonus received at the time of joining the company ?


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