Query regarding leave encashment taxability
This query is : Resolved
18 November 2014
Dear Sir/Madam,
The facts of the case is as follows -
Nature - Leave encashment paid to resigned employees.
No. of yrs of service - Apprx. 9 months
Leave entitled per year - 30 days
Leave encashment amt. - Rs.19250/-
Basic Salary - Feb-Rs.23750, Mar-Rs.35000, Apr-32667, May to Oct-Rs.35000 per month (Employee worked for less than 10 months) then how the average salary will be calculated?
Maximum Amt. not taxable-Rs.300000
Requesting you to please tell me the above paid leave encashment is fully exempt or taxble or party exempt or taxable with backup.
The facts of the case is as follows -
Nature - Leave encashment paid to resigned employees.
No. of yrs of service - Apprx. 9 months
Leave entitled per year - 30 days
Leave encashment amt. - Rs.19250/-
Basic Salary - Feb-Rs.23750, Mar-Rs.35000, Apr-32667, May to Oct-Rs.35000 per month (Employee worked for less than 10 months) then how the average salary will be calculated?
Maximum Amt. not taxable-Rs.300000
Requesting you to please tell me the above paid leave encashment is fully exempt or taxble or party exempt or taxable with backup.
Amol S Joglekar
(Expert)
18 November 2014
Average be calculated of whatever months are available with you. ( 9 months)
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18 November 2014
Dear Mr. Amol,
That means if the salary available for 09 months then for average salary i have to divide the basic figure with 09 months only, is it correct?
Further as per the facts of case the amount paid is taxable or exempt.
That means if the salary available for 09 months then for average salary i have to divide the basic figure with 09 months only, is it correct?
Further as per the facts of case the amount paid is taxable or exempt.
Amol S Joglekar
(Expert)
18 November 2014
01. Yes, divide it by 9.
02. The leave encashment at the time of retirement, resignation OR OTHERWISE is exempt, as calculated above.
02. The leave encashment at the time of retirement, resignation OR OTHERWISE is exempt, as calculated above.
Amol S Joglekar
(Expert)
18 November 2014
2 views are possible of the word OTHERWISE.
The words used in the ACT are OTHERWISE.
Some feel that otherwise includes termination or resignation. Take a suitable call accordingly.
The words used in the ACT are OTHERWISE.
Some feel that otherwise includes termination or resignation. Take a suitable call accordingly.
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