situation :
the terms of employment provides that if an employee wants to leave his job he will have to give 3 months notice period before leaving or otherwise compensating the company for same period with notice pay.
On 31st march 2010 employee left the job with one month notice period ( i.e. employee worked for 12 months including with 1 month notice period). Therfore, employee have to pay to his employer the compensation for two months notice pay salary.
on 1st april 2010 he will join new company and his new employer will reimburse the same amount which the employee have given to his previous employer for not giving 2 months notice period.
how will that be shown in form no. 16.
what will be tax treatment in both fiancial year.
(whether that compensation paid by employee will be allowed as deduction in previous year 2009-2010?)
how will be tds treatment by both the employer old and new?
CAclubindia
