Request you to kindly help with the following query:-
Following is the situation;
Mr. A has been laid off by the Company and as mutually agreed between Mr. A and the Company, Mr. A was asked to resign from the Company w.e.f. Feb 28, 11.
Mr. A was paid the following components as full and final settlement:-
1) Bonus for the year 2010
2) Retrenchment compensation named as Severance allowance (which amounts to 30 days salary, as Mr. A had rendered services for 2 years with the Company. As per Industrial Disputes Act, a workman is entitled for 15 days salary for every year worked)
3) Separation allowance ( which is 3 months salary paid to Mr. A for resigning from the Company).
If all the above components are paid before March 31, 2011. In such case, Income tax needs to be paid in the F.Y. 2010-11.
The query is, if the above components are paid to Mr. A in the next financial year, say in the month of April 2011, would there be any difference from a taxation perspective.
In specific, since the Separation allowance is the 3 months salary (ie of March, April and May, 2011), would the pro-rata salary of 2 months be taxable in the next financial year 2011-12 ?
Members pls advise on this matter.
Thanks & regards,