An employee’s post on Reddit highlighting the hidden traps of corporate retention bonuses has sparked active discussion among working professionals. After completing one year of service, the user was offered a ₹3 lakh retention bonus, subject to a full payback if they leave within 12 months. Since the worker is preparing to leave the company in the coming months, accepting the taxed payout would require them to repay the full lump sum later. Trapped by the timing, the employee questioned whether refusing the bonus without resigning immediately is feasible.
The employee wrote, “About to get a Retention Bonus of 3Lacs, but I DON'T WANT IT,” adding, “I've just completed a full year at my company and they're offering a retention bonus, all cash, of 3Lacs. Problem is, it'll be taxed and paid to me with a 20% haircut.”
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The individual continued, “Though I'm planning to leave the company in a few months. The company has a clawback period of 1 year, meaning if I leave before 12 months, I'll have to pay 3 lacs back,” explaining, “So basically I'm losing 60k this way. What do I do? Can I decline? I don't want to resign yet, and declining would mean they know I'm preparing to resign.”
What did social media say?
An individual suggested, “I was offered the same. But I left after the duration. What you can do is ask HR to increase CTC instead of a retention bonus, and be firm about it. Otherwise, what you can do is do an FD of that bonus and try to recover the taxed amount.” The OP responded, “The latter's the worst case scenario. And I want to, but the issue is in my firm, every one of my colleagues makes the same (excluding bonus) at my level. So it's gonna be difficult to ask for that.”
{{/usCountry}}An individual suggested, “I was offered the same. But I left after the duration. What you can do is ask HR to increase CTC instead of a retention bonus, and be firm about it. Otherwise, what you can do is do an FD of that bonus and try to recover the taxed amount.” The OP responded, “The latter's the worst case scenario. And I want to, but the issue is in my firm, every one of my colleagues makes the same (excluding bonus) at my level. So it's gonna be difficult to ask for that.”
{{/usCountry}}Another expressed, “Tell the HR directly that you don’t want the retention bonus because of tax implications, but would rather be ok with having it as part of the CTC. If they don’t agree, then politely deny the bonus completely. If they ask more questions, tell them you have some capital gains, and this bonus would really increase your taxable income.”
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A third commented, “You can take a tax refund in that financial year when you'll pay back.” A fourth wrote, “Was in the same boat a couple of years back. Honestly, don't say no to the money now. You can always use this as a negotiation tactic to increase the joining bonus on your next job. And the clawback can be adjusted in this year's or next year's ITR by filing a revised ITR (I never did this, so use a CA), just get all the entries in Form 16.”
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