I want to know the tax treatment of amount paid to the employees whose service has been terminated by the employer and they are paid certain amount towards full and final settlement as per their employment contract.
Now the tickling issue is that, the employees have been retrenched before completion of their employment term. so how should the employer proceed their full and final settlement amount as far as the TDS aspects are concerned. What are the tax benefits available to the employees in such situation and what other things to be taken into consideration by employer before deducting TDS.
Kindly let me know the available benefits to the employees under income tax act.
17 February 2012
EL Encashment(upto 30 days per completed year of service) and Gratuity if payable that can be consider for exemption subject to limit and condition specified. All other payment is to be added in hix taxable income from salary and TDS u/s 192 may be deducted accordingly.
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