- There is no specific provision under the Income tax Act for treatment of return of joining bonus
For detailed discussion you may opt for phone consultation
Query regarding taxation on joining bonus repayment
I am resident of India and employed in India. I joined cadence in september 2024 and got 2000000 joining bonus as part of my renumeration with a 2 year bond period. At that time I received about 1400000 after tax. No I am leaving in May 2026 and I have return 40% which comes out to be 8 lakhs. Is there a way to save tax on this ?
Asked 9 days ago in Income Tax
No, in your case there is generally no separate tax deduction/refund benefit for repayment of the joining bonus, since it was taxed as salary in the earlier year and the recovery is happening in a later year.
The Income Tax Act does not specifically allow deduction of such bonus repayment from your taxable salary now.
As a practical step, keep the recovery proof and check that your employer correctly shows the recovery in your full & final settlement/Form 16.
For a more detailed review of your case, you may book a phone consultation.
CA Shubham Goyal
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.
Thanks & Regards,
Payal Chhajed
Unfortunately there is no way to save tax on this. It's a double hit but that's how the law is.
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