Tax refund on the joining bonus return

Dear Sir,

Hope you are doing well !!

There are two options:

Case 1: Within Same Financial Year

When you received this joining bonus from your employer, this was considered as your income, was considered in your annual income and post TDS this amount was given to you.

Now, when this amount will be taken back as a recovery amount during your full and final (F&F) settlement from the employer, your annual income would decrease by this amount. Any applicable TDS on the F&F amount would be deducted by your employer.

Finally, when you will file your income tax return during its relevant assessment year, the whole income excluding the joining bonus and including any other income would be considered for the tax calculations.

The computed tax including cess would be adjusted with total TDS deducted during the year including the TDS of the joining bonus amount. Thus, the remaining amount whether positive (tax payable) or negative (tax refund) or zero (neither tax payable nor tax receivables) would be the final outcome.

Case 2: Within Two Consecutive Financial Years

In case the financial year changes, the joining bonus was considered as income in the previous year and thus counted in the ITR as income. The tax payable and TDS deducted including the TDS of the joining bonus amount, will be considered in that year.

In the next year, when the bonus amount will get deducted from the income during F&F, the total annual income in that year will get reduced by that joining bonus amount and thus tax liability will get reduced by that amount.

The computed tax including cess would be adjusted with the total TDS deducted (excluding the TDS of the joining bonus amount), during the year. Thus, the remaining amount whether positive (tax payable) or negative (tax refund) or zero (neither tax payable nor tax receivables) would be the final outcome.

So, in this manner your TDS on the joining bonus would be ideally handled.

We may assist you in ITR filing & entire procedure.

It is advisable to take a phone consultation for detailed discussion.

Frankly speaking it would be difficult to get refund of entire TDS on bonus paid by you as your income tax slab rate in that year would have been different and it might be different in this year.

Ideally what you can do now is just reduce the amount refunded from total salary and claim refund of TDS already deducted.

Further it is advised to ask the company to include such amount of 4 lakh in your F&F sheet as a proof of you making the payment to company as it could be useful later.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

In my view, you should ask the employer to show the adjustment in F&F. Because if this is shown as deduction while return filing the ITR will show a mismatch with Form 26AS. Department  will raise a query in that case.

The organisation will not adjust the bonus returned.  You will have to adjust them yourself while filing your income-tax return. 

Ideally, you will have to adjust the joining bonus in the year it is received by you.  So the 2017 bonus is to be adjust in FY 2017-18 and 2018 bonus in FY 2018-19.  You have filed your income-tax return for March 2018 which cannot be revised.  For that, you can file a revise return as dates are extended. So file it immediately and claim refund.  

For March 2018, file a letter and claim refund during the assessment proceedings.  It would be incorrect to claim in the current year. 

Hello,

It is a controversial issue.

In my opinion, you should reduce the bonus amount from the current salary income and claim the refund of the TDS deducted. For any further issue, you should ask the employer to provide the adjustment of the bonus returned in the  Full and Final Settlement.

I hope this answer satisfies your requirements.

Regards,

CA Hunny Badlani

Hi

legally speaking, there is no provision in tax law to claim a deduction of return of sign-on bonus by employee to the employer. Since the employee is leaving the company  you may request your employer to show the salary net of join-on bonus in the full and final settlement. Else, you may report return of sign-on bonus in your tax return and claim a refund along with full disclosures

Hello Sir

you can request your employer to show the salary net of join-on bonus in FNF. 

or while filling ITR u need to deduct the amount of bonus from salary & claim the TDS amt deducted onn bonus