Are Referral Bonuses and Notice Period Payments Taxable? Seeking Advice on Tax Implications

Hi All, I received a referral bonus and notice period payment reimbursed by my current company, which I had paid in my previous company. Will income tax be calculated for these two as well? Kindly inform me and take necessary action.

Thanks,
Satyam.

Hi Satyam,

Referral Bonus and notice period payments will be taxable in the hands of the employee. When compiling both employer's income, tax may arise if the current employer has not deducted tax on the same. Notice period recovery made by the previous employer is the deduction part, and most companies recover it under the deduction side. Some companies deduct it from the earning side. For example, if you have a salary of 30000 p.m and a 3-day shortfall, then the deduction would be calculated as 30000/30*3. This shortfall will impact all components like Basic, HRA, etc., resulting in a decrease in taxable income. Firstly, check on which side they have deducted your notice period shortfall.

Regards,
Siji