Can I Get a Full Tax Refund on My Bonus by Investing in Section 80C Schemes?

Last month, I received my Performance Pay or Bonus from my company for 2011-12. However, out of the bonus amount I was supposed to get, I received only 85% of it as the remaining 15% was deducted as tax.

Tax Refund on Bonus

Now, can I claim the full 15% tax refund if I invest the same in Mutual Fund / PPF / or any Section 80C tax savings scheme? If not, then how much of the bonus tax am I allowed to claim as per the law?

Regards

Bonus/performance pay is taxable. Few companies do not refund tax once it is deducted and paid to the Income Tax authorities. Yes, you can ask for an adjustment in the remaining 6 months' salary until March 2013. Tax is always deducted based on your yearly estimated income. If you are in the taxable income category after considering all investments, then tax will be deducted.

You can provide investment declarations to your employees so that in the next 6 months, tax will be deducted based on your declared investment and estimated income.

Regards,
BrainLight HR Solutions

The Statutory Bonus, usually one month's basic salary, will be paid as a bonus. This is non-taxable.

The PBB is taxable. All mutual funds, etc., are considered savings. Only up to 1 Lakh will be considered under savings.

Expenses like Driver Salary (Max 8000/month), HRA (20000 or 40% of Basic/month), Medical Reimbursement (1250/month), Conveyance (800/month), Children's Tuition fees (As per actuals), Interest on House Loan, etc., are exempted from income tax.

The normal tax exemption is 200000/annum.

If you can share your Gross and PBB, I'll work out and send you the detailed procedure to claim.

Regards,
Karthik

Performance Incentives and Taxation

Performance incentives or annual bonuses are part of your income. If your income falls under a taxable slab, the tax will be deducted at the source and deposited with the Income Tax department.