Left Job Before Bonus Payout: How Can I Avoid Paying Tax on Unreceived Bonus?

Hi all,

I worked for one company as an engineer, and after 11 months, I left that company 3 months ago. They deducted some money as a bonus from my monthly salary, and after a year, they provide that money as a bonus. In my offer letter, they did not mention any time period for the bonus. My CTC includes that money, and I have to pay tax on it as well.

I worked for 11 months, and during this time, they deducted money from my salary. However, since I left the company after 11 months, they are not giving me that money. The company says that only after completing one year can they process the amount. Yet, I still have to pay tax on the deducted money.

For proof, I have an offer letter where they mentioned the amount as a bonus.

Please advise me on what I should do. Is there any way to remove this bonus amount from the tax?

Hi, By the rules, you are eligible for taking the bonus amount. You have a claim for your bonus amount.

Thanks,
Vaishali

Let me correct you by saying that your CTC will not attract tax. It is the salary, allowances, incentives, and bonus that are earned that will attract tax and not the cost to your company. If you have not earned a bonus, you need not include the same in salaries and allowances in the tax returns. The employer, while generating Form 16, will also not mention this amount.

Bonus Eligibility and Legal Considerations

The company cannot deny a bonus by saying that you have to work for 12 months to earn a bonus. That defense is totally incorrect and illegal. However, they can refuse to pay a bonus if your salary exceeds Rs 21,000 per month by saying that you are outside the scope of the Bonus Act. If they refuse on that ground, you can demand it by countering that there is a breach of contract. Since the amount of the bonus is mentioned in the salary statement (CTC structure), the bonus is one of the conditions of service, and non-payment of it would be a breach of service condition. Then you will get it.