dear all,
I would like to have your advise on the reimbursement of Notice period amount.
I have just taken up a new assignment in a retail company. while quieting my previous employer I was suppose to give 90 days notice to the company. As I could give only one month notice and therefore I had to pay Rs 48000/- to the company. My present employer agreed to pick up this cost.
Now when I have asking for reimbursement ofthe said amount my present employer is processing it through the payroll and therefore I have to pay substantial tax on it.
My query:
1. Is the current practice adopted by my present employer correct, if not what is the alternatives available.
2. present employer is asking for any legal opinion for processing this amount outside the payroll.
Kindly hep
Regards,
Sandeep Singh
From India, Visakhapatnam
I would like to have your advise on the reimbursement of Notice period amount.
I have just taken up a new assignment in a retail company. while quieting my previous employer I was suppose to give 90 days notice to the company. As I could give only one month notice and therefore I had to pay Rs 48000/- to the company. My present employer agreed to pick up this cost.
Now when I have asking for reimbursement ofthe said amount my present employer is processing it through the payroll and therefore I have to pay substantial tax on it.
My query:
1. Is the current practice adopted by my present employer correct, if not what is the alternatives available.
2. present employer is asking for any legal opinion for processing this amount outside the payroll.
Kindly hep
Regards,
Sandeep Singh
From India, Visakhapatnam
Dear Sandeep,
Your present employer is correct.
As per Sec 2 (24) of Income tax Act - salary means salary you have earned from present or past employer.
While processing the payment, your present employer has to ensure that it is covered for computation of your tax liability.
I dont think you will get a reprive in this matter.
However, the notice period recovered from your previous employer may be taken as negative figure to arrive at salary earned since Form 16 issued by your previous employer has to be reduced to that extent, you will stand to gain there. On that basis, you can ask your present employer rework your tax liability.
rgds
vishwanath
From India, Bangalore
3Your present employer is correct.
As per Sec 2 (24) of Income tax Act - salary means salary you have earned from present or past employer.
While processing the payment, your present employer has to ensure that it is covered for computation of your tax liability.
I dont think you will get a reprive in this matter.
However, the notice period recovered from your previous employer may be taken as negative figure to arrive at salary earned since Form 16 issued by your previous employer has to be reduced to that extent, you will stand to gain there. On that basis, you can ask your present employer rework your tax liability.
rgds
vishwanath
From India, Bangalore
Hi Sandeep,
The concept of paying NP is now termed as Notice period buyout, which has become a trend now. Since its a income to you, it will be definitely computed for tax calculation. But this amount is already paid by you to your previous employer, so you can show this as an loss in earnings in your previous employment and subtract in the earnings of the previous employer itself. Hope there will be no loss on the tax, since its adjusted in your earnings in previous employment.
Do ensure this is reversed in your earnings in previous employment and shown as loss in Form 16.
Rgds,
Suresh Ramalingam
From India, Mumbai
The concept of paying NP is now termed as Notice period buyout, which has become a trend now. Since its a income to you, it will be definitely computed for tax calculation. But this amount is already paid by you to your previous employer, so you can show this as an loss in earnings in your previous employment and subtract in the earnings of the previous employer itself. Hope there will be no loss on the tax, since its adjusted in your earnings in previous employment.
Do ensure this is reversed in your earnings in previous employment and shown as loss in Form 16.
Rgds,
Suresh Ramalingam
From India, Mumbai
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