Salary head treatment

Taxable as salary with no exemptions or deductions

Taxable under the head salary. ..

But why as its a full n Final settlement amount. and there is a debate between employee n employer for the amount

As the amount paid as a settlement for leaving the job , it will be included in the Salary Income and might have been subjected to TDS provisions under section 192.

One may call such compensation by any name say, Full and final settlement , etc but in my view , it makes no difference in so far as head 'salary income' is concerned

Any payment received by an employee from it's employer is taxable only under the head salary, whatever maybe the nature of the amount

It is chargeable to tax under income from other sources under section 56(2)(XI) ... correct me if I'm wrong

Under 56(2)[(xi)....... any compensation or other payment, due to or received by any person, by whatever name called, in connection with the termination of his employment or the modification of the terms and conditions relating thereto.

@ Rama Krishnan
This provision has been inserted w.e.f. 1-4-2019 that is w.e.f. AY 2019-2020.

So far there is no interpretation available of this provision. It talks of termination payment which in my view, is post dismissal or suspension.

Here in the query , it is settlement payment agreed before leaving the job.

Secondly what if employer includes this payment in Form 16 ?

Also This money being taxable, under which section Employer will deduct TDS ( obviously under 192) ? Or this will escape TDS provisions !!

Thanks for bringing this new provision to our notice. 👍

All will depend upon how Employer treats settlement payment .

For employee I think, head of income is hardly relevant. These are my views. ....

Yes it's settlement payment before leaving the job and decided mutually by employee n employer