Tax on Retention bonus returned back


I recieved a retention bonus of INR 10Lac from my company in two installments

  1. INR 5 Lacs in April 2019
  2. INR 5 Lacs in April 2020

With the clause that if I leave the company before April 2022 then I will have to return the comlete amount to the company.
I had to pay 30% tax on the two installments that I received in the respective financial years. So actually I received 3.5 Lacs in each of the two installments.
Now I am leaving the company in July 2021 and I have to return 10Lacs to the company as per the clause.

But how do I claim the tax of amount 3 Lacs on this 10Lacs that I paid to the Income tax department. Is there any way I can do that?

Thanks in advance.

Experts please help…

@AkashJhaveri @Saad_C @Laxmi_Navlani @Divya_Singhvi @Kaushal_Soni can you help?

I am also in same situation. I had got 2,00,000 retention bonus for one year in Jan2021 and tax was deducted from it.Now i left the company and bonus amount was deducted from my Graduity and Leave encashment.
Now i want to claim income tax refund deducted from the the bonus amount while filing return.

I had got the Retention bonus of 2,00,000 Rs on Jan 2021 for One Year. I.e. if leave the company before 1 year need to return it. I left the company in July 2021 and Bonus amount was deducted from my Gratuity and Leave Encashment. Since now the amount is Returned to the company how to claim the refund for it? I had file ITR 3 return Last year through Quicko, Planning to do same this year also. But don’t know how to claim it back. Can someone guide me for it?

Hello @sahil,

If retention bonus has already been subjected to TDS at the time of disbursement and later it has been refunded to the employer when you leave and employer does not considers it in Form 16 then there is no way to claim refund later.

In your case, if the bonus is deducted from taxable gratuity and leave encashment eventually your tax liability will also reduce because your taxable gratuity is reduced (This can be considered as a setting off effect). Whatever effect is given in your Form 16 by the employer same will be followed in ITR as well.

Hope this helps!