Income Tax: If the employer relieves you by giving you salary without serving the notice period, then he will get the benefit of tax deduction. However, if you do this then you will not get any benefit.
new Delhi. Nowadays, it is quite common to switch from one job to another. Some do this for good work culture and some do it for good wages. However, switching jobs is not such a simple process. For this you have to do many types of work. Do you know that changing jobs can also lead to tax complications?
Today we will tell you how the income received after resignation is taxed. You know that even after resigning from the company, you have to work there for a certain period of time. It depends on different companies that for how many days they will make you work after resigning. Generally there is a period of 30 to 60 days. Suppose you have to serve 60 days notice but you want to leave soon. In such a situation, you will have to pay the notice period money to the company, which will not only be your monthly salary, but taxes will also be added to it.
It doesn’t end there
Suppose the company itself relieves you by giving you 60 days salary. In this case, the company can apply for deduction while paying tax. But you will not get any benefit from this. On the other hand, if your new company pays the amount of your notice period, then you will be charged additional tax. Actually, if the new company pays 2 months salary (including taxes) to the old company, then this money will be added to your income. This will be taxed according to your income. This means that now you will be taxed for 14 months and not just for 12 months. This happens due to a glitch in the tax rules, which is being sought to be removed in the budget this time.
What is demand
ICAI’s Pre-Budget Memorandum 2023 has demanded to remove this mess. It is being demanded that the amount received for the notice period should be made taxable in the hands of the ex-employer and not taxed on the employee.
