Computation of total income.

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VENKATESH RAO (Querist)

02 April 2015 Learned experts,

My son is a software engineer. When he was about to quit the company, they paid him cash incentive. Now he proposed to leave the company.

The terms put forth by the employer are:
1. He should pay back the incentive.
2. He should pay back three months pay.

My son did both. My query is:

can the amounts at 1 and 2 above be deducted from salary income for computation of income tax/ If so, kindly mention the provision of law.

thnax in advance.

CA. SHIVA SHANKARA R. SHETTY

CA. SHIVA SHANKARA R. SHETTY (Expert)

02 April 2015 whether Point no. 1 & 2, is mentioned in the employment agreement or appointment letter?

CA Kanj Goel

CA Kanj Goel (Expert)

02 April 2015 Dear venkatsh ji salary is taxable in the hands of employees on receipt or accrual basis whichever is early. Hence the amount received by your son would be taxable. As far as amount paid to company is concerned your son can not avail the benefit of same as income tax act does not contain the provision for allowance of auch expense under the head salary. I know it's a hardship on employees but it's like it and wish your son for good increment and career ahead.

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