# Employer Premature Termination Of Contract - Taxation

**URL:** <https://community.greythr.com/t/employer-premature-termination-of-contract-taxation/1825>\
**Category:** HR\
**Created:** [February 11, 2021, 7:02am UTC](https://community.greythr.com/t/employer-premature-termination-of-contract-taxation/1825 "2021-02-11T07:02:48Z")\
**Posts on this page:** 5\
**Page:** 1

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**Author:** ![sagarg](https://avatars.discourse-cdn.com/v4/letter/s/b9e5f3/32.png) [@sagarg](https://community.greythr.com/u/sagarg)\
**Post date:** [February 11, 2021, 7:02am UTC](https://community.greythr.com/t/employer-premature-termination-of-contract-taxation/1825/1 "2021-02-11T07:02:48Z")

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Any amounts paid by the employer to the employee for premature termination of a contract of employment are treatable as taxable or tax free in hands of employee ?

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**Author:** ![Ankit](https://sea2.discourse-cdn.com/flex024/user_avatar/community.greythr.com/ankit/32/1201_2.png) [@Ankit](https://community.greythr.com/u/Ankit)\
**Post date:** [February 11, 2021, 8:44am UTC](https://community.greythr.com/t/employer-premature-termination-of-contract-taxation/1825/2 "2021-02-11T08:44:47Z")

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Everything paid to Employee by Employer is taxable unless it is a Gratuity as per Gratuity Act.

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**Author:** ![deepa.d](https://avatars.discourse-cdn.com/v4/letter/d/a88e4f/32.png) [@deepa.d](https://community.greythr.com/u/deepa.d)\
**Post date:** [February 22, 2021, 5:16am UTC](https://community.greythr.com/t/employer-premature-termination-of-contract-taxation/1825/3 "2021-02-22T05:16:32Z")

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Any such compensation paid by employer for termination of contract without serving the required notice period will be part of the employee’s taxable income.

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**Author:** ![sagarg](https://avatars.discourse-cdn.com/v4/letter/s/b9e5f3/32.png) [@sagarg](https://community.greythr.com/u/sagarg)\
**Post date:** [February 22, 2021, 3:12pm UTC](https://community.greythr.com/t/employer-premature-termination-of-contract-taxation/1825/4 "2021-02-22T15:12:44Z")

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Thank you For update 😀

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**Author:** ![I\_am\_the\_Cosmos](https://sea2.discourse-cdn.com/flex024/user_avatar/community.greythr.com/i_am_the_cosmos/32/1048_2.png) [@I\_am\_the\_Cosmos](https://community.greythr.com/u/I_am_the_Cosmos)\
**Post date:** [February 27, 2021, 4:44pm UTC](https://community.greythr.com/t/employer-premature-termination-of-contract-taxation/1825/5 "2021-02-27T16:44:41Z")

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One Question : Can the employee obtain a deduction for legal expenses incurred in relation to the termination of employment/contract?