Taxation of Notice Pay

Somnath Sharma (Practicing Chartered Accountant)   (81 Points)

16 January 2010  

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.