Taxability of Retention Bonus

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This discussion addresses the taxability of a retention bonus that was paid in one financial year and later recovered due to unmet conditions. The consensus is that the recovered amount can indeed be claimed as a deduction by the employee under the Income Tax Act. A relevant case law, ACIT vs Dileep Ranjekar, is cited to support this claim.

RAJEEV KUMAR MEHTA

RAJEEV KUMAR MEHTA (Querist)
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14 July 2022 Retention Bonus paid to employee in the financial year 2020-21 and recovered back from full & final settlement in financial year 2021-22 as the condition of not leaving the company for one year was not met. Can the amount recovered back be claimed as deduction by employee?
Request for an advice in terms of the position under Income Tax Act!

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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14 July 2022 Yes, you can claim the same. There are case-laws supporting the claim.

RAJEEV KUMAR MEHTA

RAJEEV KUMAR MEHTA (Querist)
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14 July 2022 Thank You Sir! Would appreciate if you could please cite the case law for my better understanding! Thanks again

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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14 July 2022 ACIT vs Dileep Ranjekar in ITA No. 858/Bang./2016

https://www.taxcorner.co.in/2020/08/interest-earned-on-epf-after-employment-is-taxable-itat.html

RAJEEV KUMAR MEHTA

RAJEEV KUMAR MEHTA (Querist)
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14 July 2022 Thank You Sir! Shall go through the case law and do the needful!

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