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

Tax queries 1688 views 13 replies

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.

Replies (13)

Yes, no rebate can be claimed for the fine.

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?

Yes,

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

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?

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

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

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

Hi Sree Ram. I am facing exactly the same issue as yours. How were you able to resolve on your end?

Originally posted by : Sree Ram
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?

 

I could not do much about it. I ensured that I am provided with a receipt of the payment reversal to the company. I filed my return just yesterday with as much reduction in the Income Chargeable under Head Salaries and accordingly claimed my refund. I am waiting to see the actions from the IT Dept. whether will they accept my claim. Anyways, I decided to fight it back in case of any notice. If it is application of income to me, then, it should also be an application of income to the company as well.

Hi Sree Ram. I am facing exactly the same issue as you. How were you able to resolve on your end?

 


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