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

Deductibility of salary paid in lieu of notice not allowed under Income from salaries; statutory deductions control.
Payment of salary in lieu of notice is not an allowable deduction under the head Income from salaries; the tax law permits deductions only as expressly provided for each head. Alternative factual characterisations-new employer paying the ex employer, employer reducing salary, diversion by overriding title, or treating it as a commercial loss-are theoretical routes noted by commentators but do not establish a statutory deduction under the salaries head.