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Notice period pay, Income Tax

Issue Id: - 110805
Dated: 17-8-2016
By:- Mukund Honkan

Notice period pay


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If employer recovers notice period pay whether it should be deducted from Salary for Income tax purpose, pl let me know with supportings case laws/circulars thanks Mukund M Honkan

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1 Dated: 17-8-2016
By:- Ganeshan Kalyani

Sir, when an employee resigns, his Full and Final Settlement includes various elements of amount to be paid by company to employee.

If the employee is not serving the agreed notice period then the employee is supposed to pay to the company the salary of those uncompleted number of months of notice period. Here the company while settling F&F deducts the notice pay recovery amount and the income goes down by that amount. This also gets reflected in Form 16. Thus the benefit is received by the employee for the payment made toward notice pay recovery. This is my view. Thanks


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