Query regarding leave encashment taxability

This query is : Resolved

Sandeep (Querist)
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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.

Amol S Joglekar

Amol S Joglekar (Expert)
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18 November 2014 Average be calculated of whatever months are available with you. ( 9 months)

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Sandeep

Sandeep (Querist)
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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.

Amol S Joglekar

Amol S Joglekar (Expert)
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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.

Sandeep

Sandeep (Querist)
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18 November 2014 But In My TDS Package its shown as fully taxable.

Amol S Joglekar

Amol S Joglekar (Expert)
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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.

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