Tax refund of joining bonus with non-revised Form-16

Hi All,

I joined a company in August, 2023 and was given a joining bonus of 3,75,000 and after tax deduction I received amount of 2,58,000. I have decided to leave that company and according to offer letter, I am obligated to return INR 3,75,000 joining bonus. When I asked my employer to mention this transaction in Form-16 to reduce my gross taxable income, They denied, saying that it is company's policy, All they can can do is mention this transaction as 'Repayment of joining bonus' in my payslip.

My Form-26AS reflects the TDS that employer has paid.

 

Please HELP!!

How can I claim this tax?

Thank you!

Replies (2)
Quick Summary
If your employer has not revised your Form 16 to account for a returned joining bonus, you can still claim the tax refund. You'll need to report the full bonus as income in your Income Tax Return (ITR) and then claim the repaid amount as a deduction under Section 16(iii) or in the 'Other Income' section. Ensure you have documentation like your offer letter, payslips, and Form 26AS to support your claim.

Hey Gautam, this is a common issue when employers don’t revise Form 16 after such adjustments.

Here’s what you can do to claim the tax refund on the returned joining bonus:

1. Reporting in your ITR:

  • Since your employer hasn’t revised Form 16, you’ll have to manually adjust this in your Income Tax Return (ITR).

  • Under “Income from Salary”, report the full joining bonus amount of ₹3,75,000 as income (as per Form 16).

  • Then, under “Income from Other Sources” or as a “Deduction” under Section 16(iii) (repayment of salary), you should claim the returned bonus amount (₹3,75,000) as an expense or deduction.

2. How to show this in ITR:

  • If you file ITR-1 or ITR-2:

    • In the Salary section, enter the gross salary as per Form 16 (including the joining bonus).

    • Use the section “Other Income” or “Deduction under Section 16(iii)” (where salary repayment is allowed) to reduce your taxable income by the joining bonus amount you returned.

3. Documents to keep ready:

  • Copy of your offer letter showing the joining bonus.

  • Payslips showing the deduction/repayment.

  • Form 26AS showing the TDS deducted.

  • Any communication with employer about repayment.

4. Result:

  • You’ll get refund of excess tax paid on that joining bonus amount because your taxable income will be reduced by the amount repaid.


Important: The key is to claim the returned amount as a deduction under Section 16(iii) while filing your ITR. This is a valid provision for repayment of salary.

Incorrect or non-revised Form 16 does not block you from filing correctly. Here is the approach.

Step 1 - Use Form 26AS and AIS as your primary source: Even if Form 16 is wrong, the TDS deducted and deposited by your employer is reflected in Form 26AS and AIS under your PAN. The income tax department gives credit based on 26AS, not Form 16. Download both from the income tax portal.

Step 2 - Compute actual income: Add joining bonus to your total salary as reported in 26AS. Cross-check with your salary slips.

Step 3 - If there is excess TDS: If the employer deducted more TDS than your actual tax liability (for example, they deducted on the gross joining bonus without accounting for exemptions you are entitled to), you can claim a refund in your ITR by reporting the correct taxable income and the TDS credit from 26AS.

Step 4 - Request a revised Form 16: Formally email your previous employer HR and payroll team asking for a corrected Form 16 that includes the joining bonus with the correct tax computation. Employers have a legal obligation to issue accurate Form 16 under Section 203.

Step 5 - File anyway if employer is unresponsive: If the employer does not revise it before July 31, file using 26AS data. Attach a note in the ITR filing explaining the discrepancy if prompted.

For the step-by-step process on filing ITR with AIS data and how refunds are processed, this [income tax refund guide for AY 2026-27](https://taxgarden.in/blog/income-tax-refund-status-check-online-ay-2026-27) covers the full workflow.

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