I was resigned and fired from a multinational company. Provided by the company ₹3.5 million is a full tribute, but taxed at the applicable tax floor rate. Is the phone taxable? If so, why? Can I get a refund/rebate on the tax I pay?
The former greedy taxable ability you receive from your former employer depends on the exact nature of the payment and the circumstances of the payment. If it is related to the services you provide during your employment or services related to the termination of your employment, it shall be taxed as salary.
If the employer voluntarily pays the previous gratia, please state any personal qualities of the employee, such payments will not be taxable as salary. Although various courts have ruled that such voluntary payments without any legal obligations to replace the services provided by employees will be considered as capital receipts and therefore, taxable, most of these decisions are prior to the introduction of Section 56(2)(x). I believe that if such gratia is voluntarily received from a former employer, the amount may be income as income from other sources under section 56(2)(x) without any consideration.
If you wish to request that the amount you receive is not taxable, you can ask for a refund of the TDS your employer deducted when the income is returned. You will need to make sure that the amount of Ex gratia you receive has been disclosed as tax-free income in the return and that such disclosures have also been disclosed in the TDS timeline. However, as mentioned above, this view is unlikely to succeed, as it may be income from other sources.
Assume that all the Hivia you receive is voluntary, not respected or under any voluntary retirement plan, as everyone’s tax capacity is different and can be exempted, but meet certain conditions and thresholds.
Mahesh Nayak, Chartered Accountant, CNK & Associates.
If you have a personal finance inquiry, please write to us at mintmoney@livemint.com to get a reply from the experts
