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Notice Period Compensation

Started by Aasiyana01, March 05, 2013, 04:43:34 PM

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If we pay notice period compensation to employer

Fundamently - it is business income for employer & taxable u/s 37 (1) as revenue income
But this income already tax for employee as tds u/s 192 on monthly basis
So hw one income can taxable twice

Technicaly - non of salary section allow such deduction ....if it is business loss then nt setoff from salary

So wt is clear view
Plz try to resolve & provide with logical solution with IT act 1962 ref.


Employer can't deduct TDS u/s 192 on the notice period pay amount received from employee as employer  not accounted any salary expenses nor paid any amount to employee. That is a reason this amount is treated as income in the hands of employer. Though TDS under section 192 needs to be deducted on  estimated income of whole year, monthly deduction is always  r propertinate to the monthly income.  Currently there is no IT provision allow deduction while computing income of employee for notice period pay paid by employee.  Govt, has to insert some new section to enable employee to claim the notice period pay expenses incurred by them while computing their annual tax liability provided that the same expenses not reimbursed by the new employer by way of joining bonus.


But is we treat it as a Application of money where as fundamentaly it is not a application of money. because if any arrear or surplus provided by employer is taxable as per salary provision, so such expense pertain to same employer so there should be some section where employee can get the deduction for the same