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TDS to deducted on Notice Pay by New Employer

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Querist : Anonymous

Querist : Anonymous (Querist)

23 December 2009 Sir,

Kinldy advice on the foll.

A new employee was asked to join our co. within one month, whereas as per his employment contract with the earlier co. he was supposed to give notice for 3 months.

Our co. urged the employee to join us within 1 month and assured to reimburse him the salary of 2 months for short notice given to his previous employer.

Now we are reimbursing the new employee the 2 months salary paid by him to the earlier employer.

Would like to confirm whether this should be considered as his income and added to his salary income and TDS to be deducted consideing this reimbursement.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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23 December 2009 Yes, it is taxable for employees becasue

Employee`s obligation to pay the 2 months but that obligation paid by the new employer it income for the emloyee but he can claim the notice period recovery deducted from the previous employer form 16 and reduce the tax

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