Short notice pay (paid/surrendered by employee to his earlier employers) is reimbursed to new joinees based on agreed terms.
Max 2 months (i.e. 60 days) amount is reimbursed/paid which may go up to 1-2 lakh also for sr. level staff
This is paid only when employee joines with in a month and surrender the amount to his earlier employer for balance notice period.
It is reimbursed against documentary proofs submitted like copy of F&F statement or Money receipt or declaration in letter head from previous employer in this regard.
It is reimbursed/paid along with salary and hence is reflected in salary slip as "reimbursement of notice pay - previous employer."
Kindly advice:
1. Taxability: whether can be paid fully tax free or employer has to bear tax u\s 192(1A) or employee has to bear the tax on it.
2. Suitable Head under which it can be paid. please confirm if "reimbursement of notice pay - previous employer." is ok.
3. How it is treated in other companies. i.e. various standard market practices.
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