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Δdocument.getElementById( “ak_js” ).setAttribute( “value”, ( new Date() ).getTime() ); [email protected] In the above order the ITAT has discussed and decided that performance bonus cannot be treated as salary for the purpose of calculation of exemption of HRA under section 10(13A); what are the rules and procedure on Tax calculation and should not my company show the return back of RB amount in Full and Final settlement and Form 16. what should i do if my company is not showing the same in Full and Final settlement and form 16.
The appellant was an employee and had filed his income tax return in a regular manner. His basic pay was Rs 30,00,000 and has paid a rent of Rs 8,20,000. The assessing officer asked the appellant the basis of calculation for claiming the exemption under section 10 (13A). In reply, the appellant provided the calculation as Basic Pay Rs. 30,00,000, Rent paid during the year Rs 8,20,2000/- only, 10% salary comes to Rs 3,00,000 lakhs thus excess of 10% of salary comes to Rs 5,20,000 lakhs (i.e. rent paid reduced by 10% of basic pay Rs. 3,00,000). The assessing officer rejected the claim of exemption since the performance bonus received by the assessee is to be added to the basic salary. The revised 10% of the Basic salary plus performance bonus comes to Rs. 18,00,000/- thus no exemption can be allowed as the 10% of salary is more than the actual rent paid (i.e. Rs. 8,20,000 less Rs. 18,00,00). The assessing officer was of the view that performance bonus is nothing but part of salary as under section 10(13A) of income tax act 1961 the definition of salary includes “commission based on the fixed percentage of the turnover achieved by an employee”. The assessing officer was of the view that the nature of the performance bonus is that of commission and is to be added to salary for the calculation to determine exemption from the house rent allowance received during a particular financial year. Post Comment The author is an income tax practitioner and can be reached at: [email protected]
Copyright © TaxGuru. All Rights Reserved. Maintained by V2Technosys.com In the case of Sudip Rungta Vs DCIT (ITAT Kolkata) ; ITAT No. 2370/Kol/2017 ; Date of Pronouncement: 10/01/2020 Your email address will not be published. Required fields are marked *
Let us examine the facts as this decision can prove to be beneficial to the n-number of salaried employees at a time when calculations to determine the final tax liabilities for the financial year 2019-2020 and quantum of tax to be deducted by the employers is being informed to the employees. “Salary” for the purpose of this section includes basic salary as well as dearness allowance if the terms of employment so provide. It also includes a commission based on the fixed percentage of the turnover achieved by an employee as per the contract of employment but excludes all other allowances and perquisites. I have received Retention Bonus in Dec 2020 from my company and now i am leaving in between, so i have to pay back the retention bonus to company.