Notice pay deduction whether allowed

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

05 June 2011 The Employee has received Salary and on which TDS was deducted. But due to resignation, Notice pay was paid by the employee. My query is whether deduction in repect of Notice pay paid to the company is allowable from salary income or it will be part of salary income. Whether, there is any case law in this regard?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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05 June 2011 The Service Contract includes the condition of employment. As such the payment to the employer is in accordance with the contract.
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The net salary received by the employer is less than what has been shown in Form 16. If the repayment has been made by cheque , the same can be easily substantiated.
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The employee has nothing to lose as Tax has already been deducted.
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So in my view, there is nothing wrong in showing the notice period salary as a deduction.

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