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Is refunding any bonus back to the company still an application of income?


Sree Ram (MTS)     18 February 2019

Sree Ram
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Dear CA Club India, My employer paid me a sign-on bonus when I joined the company with an agreement to repay the amount in full in case I leave the company within an year. I was honoured that amount withholding tax at 30%. Now, when I wanted to leave the company within an year, the company took repayment of the bonus in my FnF settlement but did not reflect it in the 'Income chargeable under head salaries' of my Form 16. Upon querying, the finance dept. of the company, they put some legal terms saying that repayment of the sign-on bonus is due to failing to keep up to the contractual agreement and that the company has a right to collect it but not necessary to reflect it in the Form 16 as it is the employee's lookout to care for the taxes. Is this correct on the employer's part to omit the repayment from my Form16 because I lost some income in the head salaries due to the agreement made with the employer? If yes, can I deduct the income chargeable under head salaries by that bonus amount and claim back my tax while filing my ITR? If yes, under which section can I do that? Please help me on this.

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Dhirajlal Rambhia (KVO Merau Kutchh)     18 February 2019

Dhirajlal Rambhia
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Yes, no rebate can be claimed for the fine.

Sree Ram (MTS)     18 February 2019

Sree Ram
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This is not a fine as such. The company collected back the retention bonus that it gave me. I have no issue with the refund it took on the bonus. The company did not reflect it in 'Income chargeable under the head salaries' of the Form 16 which causes me to not collect the tax that I paid on the bonus. Is there no such provision that permits me to claim this in my ITR for the tax recovery?

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Dhirajlal Rambhia (KVO Merau Kutchh)     18 February 2019

Dhirajlal Rambhia
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Yes,

there is no such provision that permits to claim this in next ITR for the tax recovery.

Sree Ram (MTS)     18 February 2019

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Does that mean, I have to forego all that tax of around INR60K just because the company did not reflect the refund in the Form 16?

Is there are provision in the IT Act that enforces employers to reflect such paycheck reversals in the Form16?

Does this not amount to any malpractice on part of the employer to take back money from the employee and not reflect it in the Form 16?

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Dhirajlal Rambhia (KVO Merau Kutchh)     18 February 2019

Dhirajlal Rambhia
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income-tax-returns-good-news-no-tax-on-notice-period-pay-cut

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Dhirajlal Rambhia (KVO Merau Kutchh)     18 February 2019

Dhirajlal Rambhia
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treatment-of-notice-pay-joining-bonus-recovery-in-your-income-tax-return

Sree Ram (MTS)     18 February 2019

Sree Ram
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Sir, thanks for the prompt responses and the clear information provided in this regard.

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