I recently changed my job. As per the terms of employment, I had to pay my employers about Rs 2 lakh towards notice pay. This amount was reimbursed by my new employers. While making the payment they deducted the tax at source. If I am paying the tax on this amount, am I eligible for deduction on the payment made to my previous employers?In terms of the Section 17(2) of the Income Tax Act, 1961, any sum paid by the employer in respect of any obligation which, but for such payment, would have been payable by the employee is treated as perquisite and, hence, taxed as salary income. Your present employer is under obligation to deduct tax on this payment.
On the other hand, you will not get any deduction on the payment made as it was made to meet your contractual obligation with the former employer.
