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 tax effect on Employee (including for Form 16A) and also on the company.
Can the Company reduce the amount of compensation received from the employee in calculating the final TDS liability of the said employee at the time of full & final settlement?
On the other hand can the employee claim the salary paid back to the company, as deduction from the total salary income earned?
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TDS on Compensation
Replies (2)
if the F&F settlement is more than compensation the employee has to pay to the company, the company would end up paying only the difference amount
incase if the employee falls in the ambit of regular TDS deduction, TDS would be deducted based on such percentage as would have normally been deducted.
Should be reduced but there is no provisions in Income Tax so not reduced for purpose of calculating TDS as well as Income Tax computation purpose.
If netted off against leave salary payable and other sums payable on leaving then it would be better as there it can be reduced.
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