Taxation of Notice Pay

Tax queries 647 views 2 replies

Plz help on the following issue:

Normally when any employee resigns from any concern, he is required to give notice of his leaving before some time, say 3 months. if he fails to give such notice, he is required to pay some amout (notice pay)

what will be the tax treatment in the hands of employee, old employer and new employer if:

1. such employee pays any such amount to his employer (of the concer which the employee is leaving) wheather any dduction will be available ?

2. if notice pay is received from the new employer and he gives such notice pay to the prev. employer.

3. if notice pay is paid directly to by new employer to the old employer.

 

 

 

Replies (2)

 

MY VIEWS ARE IN RED

 

 1) such employee pays any such amount to his employer (of the concer which the employee is leaving) wheather any dduction will be available ? (NO DEDUCTION AVAILABLE)

2. if notice pay is received from the new employer (TAXABLE IN HANDS OF EMPLOYEE) and he gives such notice pay to the prev. employer.(NO DEDUCTION AVAILABLE)

3. if notice pay is paid directly to by new employer to the old employer. (NO DEDUCTION AVAILABLE)

 

hi somnath,

        1. such amount is not deductible for the employee as there s no such provision enabling him to do so

        2. if be receives from new employer, it becomes taxable. however he cant claim any deduction when he pays to his previous employer

       3. the point said above applies mutatis mutandis, coz the new employer s making payment on behaldf of the employee


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