Payroll & Income Tax

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Dear All,
I am working as a Payroll Manager in a MNC. One of our employee has raised a query for the inclusion of Special Allowance in the salary for the purpose of Notice Period Recovery. As per our company policy the notice period recovery/payment and the leave encashement is to be made on the gross salary (Basic+HRA+Spl). Can anyone guide me with the relevant section in Income Tax or any other law as per which the Special Allown is part of the salary.

From India, New Delhi
Hi, Anjani,
Since both notice pay recovery and payment and leave encashment is done on the same components, there should not be any question of non inclusion of spl allowance for notice pay recovery. I do not thin there is any law regarding this. Some companies have policy of notice pay recovery or payment on gross or basic, So its up to the company to decide the policy.

From India, Mumbai
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