Service tax recovery from relieving employee

No. Amount paid by employer to employee for premature termination of employment contract is treated as amount paid in relation to services provided by the employee to employer in course of employment. Hence, the amount so paid will be outside the scope of service tax. Please look at the definition of service under  section 65B(44).

Sepaartely, however any amount paid for not joining a competing business would be liable to be taxed being paid for providing service of forbearance to act.

Regards,

There could be a doubt. However if the amount paid is normally understood as a part ofemployment there + declarable as part of salary on which TDS deducted as part of salary and under income from salaries there maybe no issues.

If the above situation doe snot exists then the possibility of liability under declared services exists.

Dear Sir,

Thanks for your replies.

Here the amount is paid by the employee to employer for not serving the notice period. Is service tax applicable to the employee in this case?

Regards,

I believe although this arises in the course of employment, the payment needs to be studied in relation to the Sec 66E. Could it fall within the declared service of "agreeing to the obligation of tolerating an act??".

Just thinking loudly.

Yes, i guess service tax is applicable as the same is not covered under Negative list (agreeing to the obligation of tolerating an act). 

Amount can be recovered from employees or company have to pay the same considering the inclusive method.