Taxation-notice pay recovery

[Lekh Sood]

I resigned from the company and ₹ 2,00,000 was payable to me on account of salary and leave encashment.The company also deducted ₹ 50,000 as notice pay recovery.The company is deducting TDS on rs. 2 lakhs and not reducing my income to ₹ 1..50 lakhs.Is the stand of the company correct?

I will get ₹ 50,000 from current employer as agreed at the time of joining that any notice pay deducted by the previous company shall be reimbursed by the current employer.Can I request the current employer to not to tax this 50,000 as it has already been taxed for the purpose of TDS.

[DR.MARIAPPAN GOVINDARAJAN]

I hope that you would have got clarified in the above issue. If not please inform.

AI Summary

Notice pay recovery: TDS was applied on full salary despite deduction; reimbursement may be treated as separate taxable receipt. Employee received a final salary and leave encashment payment from which the previous employer recovered notice pay but deducted TDS on the gross amount rather than the net after recovery. The employee will be reimbursed by the new employer for the notice pay and asks whether that reimbursement should be exempt from tax since TDS was already deducted; the sole reply on record is a brief, non-substantive acknowledgment.