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Sign-On Bonus Tax

Sign-on bonus is fully taxable in the year received. If you leave within the clawback period, you typically refund the gross amount — even though you paid tax on it. Most employers don't adjust the TDS on clawback.

₹5,00,000
2 years
30%
In-hand bonus
₹3,44,000
Tax: ₹1,56,000

If you leave within 2 year(s), you refund gross (₹5,00,000) — not net.

FAQ

Can I negotiate clawback duration?

Often yes. Standard is 2 years; sometimes pro-rated (50% if you leave in year 1, 25% in year 2). Always read the offer carefully.

Tax refunded on clawback?

You can claim deduction in the year of clawback under section 71 / 72. Get a written confirmation from the employer (Form 16 reissue or letter).

Is sign-on bonus part of CTC?

Sometimes — especially in tech offers. A ₹50L CTC with ₹15L sign-on means base salary of ₹35L. Always clarify the breakdown before signing.