Deduction - notice pay salary

[Guest]

Whether Notice pay salary Recovered by employer shall be allowed as deduction for employee, while computing his income under the head salary?

[Surender Gupta]

Notice pay salary may be considered as deduction of salary by the employer. It is the form 16 issued by the employer which helps to decide that it is deduction from the salary to compensation paid to employer. But, there is no separate provision to reduce the notice period salary from the salary shown inform 16 by the employee from his tasable income.

[A RAVINDRA]

No. It can not be deducted from salary income either in form 16 or in ITR filed by the assessee. The notice period salary recoverd from employee by employer is in the nature of penalty for voilation of contractual obligation. Hence the said recovery can not be deducted from the income of employee in his return.

AI Summary

Debate on Whether Notice Pay Recovery is Deductible from Employee's Taxable Income Under Salary Head A discussion arose regarding whether notice pay salary recovered by an employer can be deducted from an employee's taxable income under the salary head. One participant stated that notice pay might be considered a salary deduction, but there is no provision to reduce it in Form 16 or the employee's taxable income. Another participant argued that notice pay cannot be deducted as it is considered a penalty for breaching contractual obligations, and thus cannot be deducted from the employee's income in their tax return.