Bonus return

This query is : Resolved

Noir Velma (Querist)
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07 July 2024 I had joined my previous company in June 2023, at the time of joining I was paid a joining bonus and relocation bonus. For some reason, I had to leave the company in 3 months and return the total of these bonuses back to company, when I was paid the amount tax deductions were already made by company but at the time of returning I had to return full amount. Now, in my form 16,company has showed my total income to be inclusive of these two bonuses. On asking them to revise form 16, they denied to do the same since tax has already been paid. I have a recovery letter from the company though, stating that they recovered the bonus amounts from me. What should I do while filing my ITR?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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08 July 2024 Even though the TDS has been paid, but company can revise the TDS return & TDS amount can get adjusted to some other payments. (provided they are willing to help you)
You will not get the adjustment of returned amount in ITR based on the escalated figures in Form 26AS & AIS/TIS reports.

Noir Velma

Noir Velma (Querist)
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08 July 2024 The company says - 'in the absence of any specific provision permitting reduction of such amount while computing taxable salary, while deducting taxes at source, the Company has not considered such recovery as a permissible reduction from your taxable salary/ full & final settlement. The taxes deducted have been deposited with the tax authorities and an appropriate credit shall be available to you in Form 16 to be issued by the Company.'
They have further said that I can consult a tax consultant and file ITR if we think that the return of excess tax should be made.
What can be done then?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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08 July 2024 Taxability of Refund of joining bonus is one of grey areas for salaried individuals and Income Tax Act is also silent on this. In one case it can be considered as amount paid on violation of terms of employment and therefore provides that taxability should arise on gross basis only that is without adjusting the same.
There is another school of thought which emphasis that this amount can be adjusted against salary and tax would be payable on net basis. However there is no concrete ruling on this stand.
Unless the employer cooperates to revise the form 16, there is very little hope that ITO can help you out.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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26 August 2024 Good luck.

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