Bonus Given With Conditions - CiteHR
Bk Mohanty
Consultant For Indirect Taxes & Labour
Sr. Hr Executive @ Polymerupdate
Premkumar Nair
Manager (hr)-retired
Sr Manager Hr & Administration
Operations- Bpo
+3 Others

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Recently my company gave me extra bonus in order to try to retain me, however there was a clause attached to it that in case I choose to leave the organisation prior to a particular date the bonus amount paid to me will be recovered from me.
My question is that in case I decide to move out before the specified date I will have to pay back the bonus amount to the company, but what about the tax treatment on the bonus amount. When I got the bonus TDS was deducted by the company on that amount, Now when I have to pay back the amount am i liable to pay the total amount paid by the company?
What will happen to the TDS that was deducted and deposited to the Govt ?
Amit Sood

Hi Amit,
Once you will pay back the amount to your employer or they will deduct the same in your F&F statement then your taxable salary/income automatically decreased. You can take the deducted tax money back through inceome tax return.

Thanks Shashi,However the concern is that the Tax hasbeen deducted and in case I decide to leave after Sept 2013 then I would already have filed the tax return for 2012-2013.
If the tax has already been deducted, then there is provision of claiming for realisation of excess tax from the authority concerned which has to be shown while filing the return after proper calculation. As a matter of fact the tax is calculated on yearly earnings only.
bk mohanty
Cypress Management Associates

Hi Amit, No issue if you will leave in 2013 Sept then same amount will show in -ve i your salary earning porsation. Due this this your tax libilites will decrease. regards, Shashi
Dear Amit, we always file returns for previous year we never file returns in advance.
Please understand returns are to return the extra tax.
Say for eg: You worked at Company X with Y CTC and tax on it was Z pa.
Your tds would have been A = Z/12.
Now you worked at this place say till Sept 2013. So you paid your TDS A as per your whole year's CTC where as you should have been paying only for 6 months.
So you file the claim it next year in 2014.
I do not know the "How" process but that is how it works.
So if you've paid your tax on the bonus, and say you're resigning in Sept this year, you'd file for return in next year. Tax is always paid in current year, assessed and returned for previous year.
So in 2013 we would assess and return 2011-12's returns. :)

The bonus is paid to you as per the law they have no right to repay, just putting pressure on you they have treated. do not worry, you can file case in the Labour court

First of all, any bonus paid to an employee covered under Payment of Bonus Act 1965 cannot be conditional. Secondly, the condition of payback of bonus amount is punitive and hence cannot be shown as reduction in salary. Hence, the Form 16 may not reflect the reduction in total salary. Thus I' m afraid whether you will be able to claim tax refund.
Thanks to all for their valuable response, Not sure how things will proceed further, but will definitely seek everyone’s expert advise in case required in future.

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