Income taken back

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Gaganjit Singh Walia

Self

21 Points Posted on 05 July 2023

Dear friends

When I joined a company in 2021 i was given a joining bonus of 1 lakh after deducting TDS which was reflected in my form 16 back then.

In 2022 i left the company, so the company asked me to pay them back the bonus which i did by transferring the amount to their bank account.

This refund is not shown in form 16 of 2022.

My question is

I paid tax on bonus in 2021 which i have returned in 2022, am i entitled to any benefit in 2022.

can i reduce my income of 2022 by 1 lakh for the bonus which i returned.

what about the tax on bonus i paid which i never really benefited from as i had to return it back.

please advice

kindly support your reply with relevant section, rule, circular, judgement etc.

thanks

Replies (2)

Quick Summary

A user received a joining bonus in 2021, paid tax on it, and then repaid the full amount in 2022 after leaving the company. They are seeking advice on whether they can reduce their 2022 income by the repaid bonus amount and reclaim the tax paid on it. While the general principle is that repaid bonuses are not deductible in the year of repayment, some tribunal cases have allowed such deductions under specific circumstances, arguing that salary not finally received isn't truly income.

CA Aakarsh Jain

4330 Points Posted on 05 July 2023

Hi Gaganjit.

One such case was filed with the Income-tax appealte tribunal - S.S.N. Ravi, Chennai vs Assessee on 6th May 2016 I.T.A. No. 933/Mds/2015 for A.Y 2008-09.

Key Takeaways from this case:

Sign-on bonus refunded to the previous employer can not be reduced from taxable salary.

Refund for TDS deducted by the previous employer at the time of returning the sign-on bonus can not be claimed.

Aashok Kumar Sharma

Finance/Compliance Consultant

75671 Points Posted on 08 November 2026

Joining bonus repaid:
• If you received a joining bonus of Rs 1 lakh (taxed as salary in that year) and later repaid it (on leaving before the bond period), the repayment isn't deductible under the Act (no provision). Some tribunals have allowed it (salary repaid isn't "income" received). CBDT doesn't provide relief.
• Practical: if repaid in the same year it was received, the employer can reduce salary (and TDS). If repaid in a later year, you can try claiming it as a reduction of salary in the year of repayment (contested). Some file rectification or revision for the original year (if within time) to reduce income, based on the principle that "salary not finally received isn't income" (e.g. ITAT Bangalore in some cases).