Salary Paid by Employee as compensation to company

Radhesh Bhoot (Aspiring CA) (229 Points)

11 December 2010  


A Employee has left the company in the first month of the notice period (total notice period - 3 Months) and paid compensation to the company for two months salary.

I would like to know about the accounting and taxation effect on Employee (including for Form 16A) and also on the company.

I meant can the employee claim the salary paid to the company as deduction under any section of IT Act?