TaxTMI 
TaxTMI 
Whether Notice pay salary Recovered by employer shall be allowed as deduction for employee, while computing his income under the head salary?
Deduction - notice pay salary
26 Dec 2008 
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Notice pay recovery: whether recovered notice salary reduces taxable salary is contested, with treatment varying by payroll and legal view.
Whether recovery of notice pay salary by an employer may be treated as a deduction from the employee's salary is contested: one view treats such recovery as reflected in payroll/Form 16 and potentially reducing the salary figure, while another view characterises the recovery as a penalty for breach of contractual obligations and therefore not deductible in the employee's return. (AI Summary)
Whether recovery of notice pay salary by an employer may be treated as a deduction from the employee's salary is contested: one view treats such recovery as reflected in payroll/Form 16 and potentially reducing the salary figure, while another view characterises the recovery as a penalty for breach of contractual obligations and therefore not deductible in the employee's return. (AI Summary)