Taxability of Notice Pay
This query is : Resolved
01 October 2007
Query 1
Employee working in a company leaves the Job from Company without giving the Notice.
So the Company deducts the Notice Payment at the the time of full & final Settlement of the employee.
Whether Employee would be able to take deduction of Notice payment from his Salary Income
Query 2
The Second Company Reimburses to the Employee the Notice Pay Paid by the employee to the previous company.
Whether the recovery of Notice Pay made my employee from the current Employer would be considered for taxation for computation of Income of Employee.
Kindly quote with relevant Text, judgement or Notification if available
Employee working in a company leaves the Job from Company without giving the Notice.
So the Company deducts the Notice Payment at the the time of full & final Settlement of the employee.
Whether Employee would be able to take deduction of Notice payment from his Salary Income
Query 2
The Second Company Reimburses to the Employee the Notice Pay Paid by the employee to the previous company.
Whether the recovery of Notice Pay made my employee from the current Employer would be considered for taxation for computation of Income of Employee.
Kindly quote with relevant Text, judgement or Notification if available
05 October 2007
Section 15 of the IT act deals with the asked scenario.
The notice pay deducted by the first company need not be shown as salary income earned from the first company.
The notice pay recieved from the second company need be shown as salary income earned from the second company.
Section 15 says the salary income is taxable on Receipt or Accrual basis whichever is earlier but the salary can be taxed only on one basis.
Thus the salary earned in the second company can be offered on receipt basis and the deducted notice pay in the first company shall not be offered as salary on receipt basis.
The notice pay deducted by the first company need not be shown as salary income earned from the first company.
The notice pay recieved from the second company need be shown as salary income earned from the second company.
Section 15 says the salary income is taxable on Receipt or Accrual basis whichever is earlier but the salary can be taxed only on one basis.
Thus the salary earned in the second company can be offered on receipt basis and the deducted notice pay in the first company shall not be offered as salary on receipt basis.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Fixe term employment
- Is any professional CA is here please reply
- GST ITC REVERSE
- Gift Received from nonblood relative
- Section 50-fixed asset-->building ceases to exist
- EXPORT BILL UNDER LUT FREIGHT CHARGE INCLUED IN INVOICE IT LIABLE TO TAX
- RCM ISSUE ON RENT AND TRANSPORTATION CHARGES
- Reprocessing of rectification order AY 2025-26
- Putting a heading on received mail
- Tax Audit u/s 44AB for Transport Business A proprietorship is engaged in transportation business and
- Consolidated financials
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- STATUTORY AUDIT OF A SMALL PRIVATE COMPANY INCORPORATED ON 28.03.2025
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
- How to pay remaining amount of TDS after due date?
- Resigning a auditor from the company for misconduct
- RCM @ 5% on Hamali charges, Transport Charges, Unloading charges we take ITC or not
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
