Salary Taxation-Very urgent

[Dhirendra Srivastava]

I had a question regarding Taxation of salary. suppose if an employee who is working in a company for 5 years now got a job in another company.He had worked for 6 months in the previous year with a salary of Rs. 100000 pm. Now his contract of employment require him to give either 3 months notice or 3 months salary in lieu of notice i.e Rs. 3 Lac. His new salary is Rs. 200000 pm. So if employee paid 3 months salary to the company, at the time of computation of income from salary can he claimed deduction of Rs. 300000.00

AI Summary

Employee's Three-Month Salary Payment to Former Employer Not Deductible from Taxable Income, Experts Conclude An employee transitioning to a new job questioned if a three-month salary payment to their former employer, in lieu of notice, could be deducted from their taxable income. Three experts responded. One stated there is no specific tax deduction for such salary sacrifices. Another suggested exploring the theory of diversion by overriding title, proposing alternative treatments like having the new employer pay the compensation. The third expert emphasized that tax computations must adhere strictly to the Act, and no deduction for the payment is permissible under 'Income from salaries,' citing relevant case law.