03 July 2007
Sir, Encashment of Earned leave is exempted to the extent of 3,00,000/- at the time of retirement. Balance if any is taxable under the head "salaries".
If a PSU is providing rent free residential un furnished accommodation, whether the encashment of earned leave (actual amount-300,000) and half pay leave at the time of retirement should also to be considered for calculation of perquisites? Kindly clarify whether encashment of leave should also to be considered as salary at the time of retiremnt for calculation of perquisites. If that is the situation, there will be more tax on account of perquisites at the time of retirement of an employee. In such a case, employee better to vacate the house before the year of superannuation to avoid the incometax.
09 July 2007
For the purpose of valuing Residential accomodation, salary includes the pay, Allowances, Bomus, commission or any other monetary payment. In my opinion the leave encashment on retirement shall not be included in the difination of salary.
CAclubindia
