Company deducting tax froFull and Final settlement after 2 y
Dinesh SINGH
(Querist) 17 November 2015
This query is : Resolved
I was working as sales head in mnc but due ti some reasons got terminated on 30 th july 2014 and the company were to settle my account immediate but they did not now they have agreed to pay FNF of 5.30 lacs which is a sum of :
1. July salary.
2. Two month notice period amount.
3. Bonus of 6000
4. Earned leaves
5. Performance paynof 1.6 lacs
Now there accounts department when vross questioned why they are implying income tax hecsaid since it is being settled this year so you have to pay tax.
Kindly help on urgent basis .
Regards
Dinesh
rajagopal.s
(Expert) 17 November 2015
Hi
Technically the company should deduct tax before disbursing the F&F. But you also have the right to submit declaration that you are not assesable for tax for either of the following reasons if applicable to you
a) If your annual income on the date of receipt of money is within tax limits where income tax does not apply
OR
b) If you already paid taxes on your F&F in case you have declared the money as accrued income in 2014-2015 financial year.
hope this clarifies.
Dinesh SINGH
(Querist) 17 November 2015
Salary pending is july where as technically the notice period is 2 month being paid by coy is normally termed as severence pay on termination of employment and is considered to be out of tax sphere...pls clarify i can be wrong. Thanks
Rajendra K Goyal
(Expert) 18 November 2015
Company is justified in deducting tax at source, you can claim refund, if any, by filing return.
In case the employer terminates the employee, pay notice period salary, claims deduction thereof, such amount becomes taxable in the hands of the employee.
Kumar Doab
(Expert) 18 November 2015
The company must have supplied the FNF statement showing each amount under each head and shall supply TDS/Form16...You may show it to your Income tax lawyer
