I was paid a retention bonus of Rs 93,750 out of which an amount of Rs.19,313 was deducted as TDS ( ie I received Rs 74,437 ) in month of July 2011 with a condition that I wont leave the organization before July 2012. I left the organization in March 2012 and as a result I was asked to pay back the entire amount of Rs 93,750 and I did. I was told that I would get a refund of the TDS amount ie Rs .19,313 by IT department when I file the returns. Now when I get the form 16 from this organization, they have kept the entire amount of Rs 93,750 as my earnings and as a result the form 16 doesnt show any refund that I am supposed to recive on my IT returns.
When I inquired about the why does my returned bonus still feature in "My earnings" in form 16 from my ex company, they replied the following:
"As per income tax act we cannot reduce the earnings due to recovery of this bonus. At the time of processing your final settlement your earning was reduced by Rs 93,750 so that is why your income tax liability was reduced and same was corrected( added back to wages) latter on at the time of finalization of TDS for March which resulted in increase of income and hence increase in taxes."
Could someone please help me by offering an explanation as to how is it that I am paying taxes without earning that amount?
CAclubindia
