Hello,
I am looking for a definite answer on how will the tax deductions be done for an employee who leaves the organization in the middle of the financial year. Example, an employee is leaving the organization in October 2009, and per the saving/investement declaration he is liable for X amount of tax and was being deducted X amount each month till this month. But now having decided to quit the profession and pursue higher studies, this gentleman is not going to have any other earnings expected in the ensuing months. In this scenario, is there a provision for his earnings from May 2009 to Oct 2009, be calculated for tax purpose and if that allows him be exempted from tax, can the organization exempt him from this current month's deduction? Similarly, can he get whatever the amount has been deducted thus far?
Hope my intentions are clear, though a bit long. I really appreciate your valuable time and am looking for some valuable answers.
Thanks
Shajeev
From India, Ernakulam
I am looking for a definite answer on how will the tax deductions be done for an employee who leaves the organization in the middle of the financial year. Example, an employee is leaving the organization in October 2009, and per the saving/investement declaration he is liable for X amount of tax and was being deducted X amount each month till this month. But now having decided to quit the profession and pursue higher studies, this gentleman is not going to have any other earnings expected in the ensuing months. In this scenario, is there a provision for his earnings from May 2009 to Oct 2009, be calculated for tax purpose and if that allows him be exempted from tax, can the organization exempt him from this current month's deduction? Similarly, can he get whatever the amount has been deducted thus far?
Hope my intentions are clear, though a bit long. I really appreciate your valuable time and am looking for some valuable answers.
Thanks
Shajeev
From India, Ernakulam
Dear Shaajeev,
Finance will deduct his Income tax liability till his LWD (Last working day). However, the staff can request the finance not to deduct the same as he would be paying any tax while he files his returns. Not sure if Finance will agree.
Now, if tax is deducted, and the staff does not earn any income after his LWD for the financial calender i.e. till 31 March, he would have to file his returns with IT and any additional amount that might have been deducted by IT will be reimbursed to him.
Hope that answers your question.
Regards
Ukmitra
From Saudi Arabia, Riyadh
296Finance will deduct his Income tax liability till his LWD (Last working day). However, the staff can request the finance not to deduct the same as he would be paying any tax while he files his returns. Not sure if Finance will agree.
Now, if tax is deducted, and the staff does not earn any income after his LWD for the financial calender i.e. till 31 March, he would have to file his returns with IT and any additional amount that might have been deducted by IT will be reimbursed to him.
Hope that answers your question.
Regards
Ukmitra
From Saudi Arabia, Riyadh
Thank you, Mitra. I have one more question regarding furnishing the proof of savings/investement. As it is only the middle of the current financial year, it seems difficult, but the finance dept is insisting on them.
Can you give me any resolution for this.
Shajeev
From India, Ernakulam
Can you give me any resolution for this.
Shajeev
From India, Ernakulam
Hi Shajeev,
Its manadory for the staff to submit the same. Since based on the documents the finance can deduct/ or give rebate on tax amount. If the staff fails to provide them the documents, they will presume no investement and deducte the tax.
No worries for the staff, as in later stage, if does make any investement he cam claim rebate from IT dept.
Regards
Ukmitra
From Saudi Arabia, Riyadh
Its manadory for the staff to submit the same. Since based on the documents the finance can deduct/ or give rebate on tax amount. If the staff fails to provide them the documents, they will presume no investement and deducte the tax.
No worries for the staff, as in later stage, if does make any investement he cam claim rebate from IT dept.
Regards
Ukmitra
From Saudi Arabia, Riyadh
Hi Shajeev,
Nothing worry in this Deduction,
Calculate the actual salary from 01st April to Oct '09.
And Update the original proof (LIC payment , Rent, Loan from Apr - Oct) etc.,
Calculate the Tax accordingly
Prepare Form 16 & hand over to that employee.
The next organisation will definately ask him about his form 16.
thanks & regards
N. Srinivasan
9600004773
9600004773
Nothing worry in this Deduction,
Calculate the actual salary from 01st April to Oct '09.
And Update the original proof (LIC payment , Rent, Loan from Apr - Oct) etc.,
Calculate the Tax accordingly
Prepare Form 16 & hand over to that employee.
The next organisation will definately ask him about his form 16.
thanks & regards
N. Srinivasan
9600004773
9600004773
If an employee leaves the organization in the middle or andy day of the financial year, we have to calculate the TAX liablity on salary paid to him after considering the proof of investments submitted by him. Next step to issue him Form 16. If an employee gives only declaration in written but not able to produce the proofs for the same, Company is obliged to deduct the Tax from his salary. Employee can claim the refund if any to Income Tax Department by filing his return / he has to produce his income proof to next organisation for the part of the financial year / he has to declare all the income for the Financial Year in Income Tax Return.
Regards,
Sachin
From India, Pune
Regards,
Sachin
From India, Pune
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.
Tax calculation.xls