Taxability of income on resignation

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

16 February 2013 I was working in a private company for 25 years and resigned during 2012-13. I have received leave salary during the final settlement for 240 days. Is it taxable?

Further, I got my PF contribution settled from the PF authorities (not opted to transfer) Should this be offered to tax while filing my return of income for AY 2013-14?

I have also received my gratuity settled by the employer. Should this be offered to tax while filing my return of income for AY 2013-14?

CA Chandrasekaran.S.R

CA Chandrasekaran.S.R (Expert)
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16 February 2013 leave encashment as atermianla benefit on retirement by resigantion or oterwise is taxfree to the extent of earned leave @30 days for each yera of service not exeeding 300 days during the life of an assessee

Pf accumulations are taxfree.

Gratuity is tax free if paid by an establisment covered undere the Act subject to certian limits

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Anand

Anand (Expert)
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18 February 2013 1. Leave Encashment
The amount of leave encashment which will be exempt from tax is the least of the following
- Rs. 3,00,000/-
- Avg salary drawn in 10 mths immediately preceding the retirement x no. of mths of earned leave subject to a maximum of 10 months. (Salary for this purpose means Basic + DA)
- Amount actually received as encashment

2. Your own PF contribution is not taxable. The companys conttribution is also not taxable provided it does not exceed the notified limit (i.e upto 12% on basic) The interest earned on the contributiuons is also exempt if it has not exceeded the specified percentages. However, if your PF trust is unregistered or unapproved then the company contribution and the interest on both company and employee contribution thereon is taxable in full. so make sure its a recognised PF which in all probability it will be. :-)

3. Gratuity is exempt as least of below amounts
- rs. 3,50,000/-
- amount actually received
- 1/2 mths salary (based on avg salary for 10 mths preceding the retirement) for each completed yr of service

Querist : Anonymous

Querist : Anonymous (Querist)

18 February 2013 Thanks for your resolving the query.

Please also guide me on the Sections under which the above income are to be shown while filling up and the exemptions to be claimed thereon.

Santosh Mishra

Santosh Mishra (Expert)
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27 February 2013 For Leave encashment, least of following is exempted from tax:
1. Earned leave months x Average salary( Basic)( sec 10( 10AA))
2. Avg. monthly salary x 10
3. Maximum amount 3, 00,000
4. Actual amount received

Earned leave months would be (number of year of service*30) minus leave availed by you during your service.

Average monthly salary here means salary drawn by you in last 10 months immediately preceding the retirement.

Your provident fund settlement would be exempted from tax a you contribution period is more than 5 year, I assume you are a employee of a private company and your PF account was with EPFO.

Gratuity paid under payment of Gratuity act is exempt to the tune of Rs.10,00,000.
Sec 10(10)II