Is payment by an employee towards short notice will form part of Taxable income from salary and laible to tax.
Regards,
Murali
DT Fundas - Tarun rustagi
( Author)
(1150 Points)
Replied 25 May 2010
i think the question submitted by u as per my view is incorrect or plz give some more information so that i can become able to understand the problem
Rachit
(Analyst)
(913 Points)
Replied 25 May 2010
Payment made by employee to the employer towards short notice would form part of Taxable income of the employer. It would be taxed under IFOS
Shudhanshu Agrawal
(Business)
(2570 Points)
Replied 25 May 2010
| Originally posted by : murali | ||
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Is payment by an employee towards short notice will form part of Taxable income from salary and laible to tax. Regards, Murali |
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If an employee doesnt serve his/her notice period in such a case, employer ask for a amount to be paid by the employee. This amount is not considered in the calculation of employee but for employer this will be income and hence taxed.
DT Fundas - Tarun rustagi
( Author)
(1150 Points)
Replied 25 May 2010
hey dear friends
can anyone plz clear my doubt
plz tell me what is the meaning of short notice here and in which circumstances employee pays that amount to employer.
thanks & regards
tarun rustagi
Shudhanshu Agrawal
(Business)
(2570 Points)
Replied 25 May 2010
| Originally posted by : tarun rustagi | ||
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hey dear friends can anyone plz clear my doubt plz tell me what is the meaning of short notice here and in which circumstances employee pays that amount to employer. thanks & regards tarun rustagi |
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In big companies a person before leaving the job need to give notice to the company so that company can fill his place before he leaves. In some companies notice period is 2 months and in some it is 3 months. If suppose i have to serve 30 days time after notice but i want to leave it after 15 days in this case company will ask me to deposite the amount of 15 days and these 15 days are short notice period.
DT Fundas - Tarun rustagi
( Author)
(1150 Points)
Replied 25 May 2010
thanks dear sudhanshu and sorry to all members bcoz upper i say the problem is wrong really sorry bcoz actually i have never heard about this problem.
Manmohan ACA, CS
(Chartered Accountant )
(14243 Points)
Replied 26 May 2010
Salary received in lieu of notice period
Meaning: When an employer retrenches an employee then he has to give a proper notice. If an employer fails to do so then he will have to pay salary equivalent to notice period, apart from retrenchment compensation. Such amount is known as salary received in lieu of notice period.
Treatment: Fully taxable.
harish sharma
(student)
(58 Points)
Replied 26 May 2010
mr murli
ur asking Payment made by employee to the employer towards short notice period
Tax treatment in the hands of employee
nothing is chargeble to tax b'coz it is a payment and not any income.
but insted of paying in cash employee adjusts his leaves viz CL/ PL towards short notic pay than leaves forgoteen will not becom taxfree and they will chargable to tax at the time of encashment/leaving the job.
Tax treatment in the hands of employer
amount received by employer from employee towards short notice period will be chargable to tax as his business income.
for further assistance feel free to contect.
DT Fundas - Tarun rustagi
( Author)
(1150 Points)
Replied 26 May 2010
dear manmohan u r giving reply on employer part but the question is based on employee part.
$wap$
(Assistant Auditor)
(189 Points)
Replied 26 May 2010
@ harish tax treatment in the hands of the employer would be chargeable as income from other sources according to me. Please correct me if I am wrong..
harish sharma
(student)
(58 Points)
Replied 26 May 2010
| Originally posted by : $wap$ | ||
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@ harish tax treatment in the hands of the employer would be chargeable as income from other sources according to me. Please correct me if I am wrong.. |
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dear
section 56 is residual section and comes into play only when a particular income is not coming under the ambit of previous heads of income.
since employees are business assets and are used in performing business activities any amount received from them is business income.
another point is that section 28 take into in it any benifit or perqs. recvived in performence of business.
hence short notice period salary is chargeable u\s 28 and not u\s 56.
Gary
(Others)
(21 Points)
Replied 01 July 2015
Even I have the same question,
I have made payment to my old employer for Salary in lieu of Notice Period.
I have recevied the same amount from my new employer as joining bonus but on this amount the new employer has deducted Tax considering it as an income for me.
But actually, it is not an income as i have already paid the same amount to old employer.
Now I want to know how to adjust this amount for calculating the taxes.
Under which section the payment will be considered for tax exemption?
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