Tax return on service bond payment

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If you've paid an amount to break a service bond agreement and your current employer is reimbursing you, you might be wondering how to get a tax deduction for it. While your notice buyout amount might be deducted from your total income, the service bond payment may not appear on your Form 16. This guide explores how you can potentially reduce your taxable income when filing your tax return, considering the limitations and the information reported in your Form 16.

Ashish

Ashish (Querist)
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15 November 2021 Hi, I had to pay an amount of 4 lakh for breaking the service bond agreement with my previous employer along with a notice buyout. My current employer has agreed to reimburse the bond and notice the buyout amount I paid to my previous employer but in the full and final settlement from my previous employer only the notice buyout amount is deducted from total income under the income tax calculation. How can I reduce the amount I paid for bond payment while filing tax returns so that I don't have to pay extra taxes. While talking to HR they said the bond payment won't show up in form 16 as it's not part of CTC.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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15 November 2021 Upto 10% variation is allowed in salary income reporting. Reduce to this extent only.

Ashish

Ashish (Querist)
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15 November 2021 How can I reduce my income while filing a return? it picks up from form16 only right? And is there a way to claim full deduction on this?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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15 November 2021 See whether correction is allowed.
Full deduction can't be claimed in view of figures compared with form 16.

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