Tax treatment of notice pay deducted from salary

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Hello,

I wanted to know tax treatment of notice pay deducted from salary of employee?

Suppose the notice period is 3 months and the employee has given resignation on 1st December.He is serving it for 1 month and paying off for 2 months out of his accumulated leaves balance amount and exgratia amount.even he is not receiving salary for last month served(Dec).Now my question is: Can it be said that there is no intention to pay & recieve salary for those three months i.e. for which he hasn/t recd salary as well as his leave encashment and exgratia has been retained by the company.

or Should he be taxed for salary upto dec without any deduction of notice pay ?

Please quote the case law if any.

 

Replies (3)

notice fee is penalty for employee / employer, if employee quits his salary upto the day of work will be accounted in books, but his cash outgo will get adjusted with penalty (notice).

Dear Sir,

I request you for clear tax treatment.Should he be taxed for salary upto Dec. even if there was no intention to pay & receive salary once the resignation is given by employee and accepted by employer?

Originally posted by : CA PALLAVI VOHRA

Dear Sir,

I request you for clear tax treatment.Should he be taxed for salary upto Dec. even if there was no intention to pay & receive salary once the resignation is given by employee and accepted by employer?

salary contents are not dependent alone on TDS, but there are more components like PF/ESI/PT, if the said components continue upto dec, then TDS will also go at par with them, if not then provisional salary would be accounted for penalty. 

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