Full and final settlement with proof of investment

If an employee is leaving in the middle of the year without Submitting Proof of Investments, What all options are available with the Employer at the time of Full & Final Settlement of that employee regarding Income Tax.


I assume you are talking about a scenario - employee left without giving notice / absconded. In such a case, in the absence of proof documents, as an employer, the only option available is deduct tax for the compensation till last working day leaving all investments planned at the start of the FY, aside, recompute tax and remit tax. Make the FFS after this only.

The challenge would be if the TDS is greater than compensation pending for disbursement. I think HR can hold the relieving letter till sort out this issue.

At a later stage, if employee makes investments as planned, let him/her claim at the time of return filing and get it refunded.


The employer should remove all the declarations and tax him fully while doing the F&F settlement.