leave encashment??

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C.A Alok Mukherjee (Querist)
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06 November 2010 An employee had joined during the financial year 2010-11, and his employer declared the amount of leave encashment he received on retirement (say six months earned leave), now whether the present employer has a obligation to consider it as income and deduct tax? Please reply.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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09 November 2010 If an assessee is employed by more than one employer during the year, each of the employers shall issue Part A of the certificate in Form No. 16 pertaining to the period for which such assessee was employed with each of the employers and Part B may be issued by each of the employers or the last employer at the option of the assessee.
Part A includes details like name, address PAN TAN, and Quarterly TDS details.
PART B- Computation of Income and Tax.

Please refer Form 16 issued by the previous employer and ensure whether leave encashment amount has been properly dealt with.
If not, then present employer must deduct tax upon all such income which has been left by the previous employer for the proper compliance of TDS provisions by considering the relevant exemption U/s 10(10AA)(ii)in case of non- Govt Employees.

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