NOTICE PERIOD AMOUNT

I think the amount you have paid to earlier employer as welll as received from earlier employer will not show anywhere in form 16. It is just you have received and forwarded so it does not attract TDS as well as not counted in salary income. idealy company reimbnurse this amount directly to former compnay not to employee itself. Cheers!!!

Mr.Balaranganath, I have heard about the peculiar treatment in this case. But i am not 100% sure about this. Still i would like to give out what i heard, so that at one point it may get clarified. In case of notice period salary being reimbursed by the new employer to us, then ask whether the company is ready to pay FBT on it or else, it will be taxable in the hands of the employee.

Dear. This 80,000/- U have recd will be part of form 16. As well the old Co. have to issue form income certificate /form 16 with net amount & you can claim in case excess tax is deducted.

Hi, Notice Buyout amount paid by your current employer will be part of your salary income as perquisite u/s 17, being obligation of employee discharged by employer. The same will be subject to TDS u/s 192. This will be reflected in your Form No.16 issued by current employer.

Similar thing happened with me, the new company were ready to buy out the notice period amount and now they've added that in my payslip where as this is not my earning.

I've given the same amount to my previous company.

Could you please help me how can I claim the tax which is paid on this amount.

 

Dear O.D. Sharma Sir,

Regarding this notice period amount , if the previous company has issued form 16 without net amount, then should we deduct it from the gross amount ourselves only, and in the former case how do we valuate tax liability?

 

Thanks & Regards!!

Notice period is a kind of penalty imposed on employee for not serving notice period. In Income tax no exemption or deduction is allowed for penalty. Treatment for notice period will depend upon the accounting policy followed by the company.

 

If a company is reducing amount of salary expenses while recieving notice period amount then they will reduce the salary amount in Form 16 issued to the employee.

Second method is when company is considering it as its income and not reducing salary expenses. In this case gross salary of the employee will not decrease and hence in Form 16 notice period amount will be added in taxable income. Here employee need to pay tax on this notice period as well.