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Tds on leave encashment

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Querist : Anonymous

Querist : Anonymous (Querist)

11 April 2014 we have a client whose total taxable income is more than 10 lacs and has been transferred to a new organisation. now he received a sum of rs. 2,94,000 as leave encashment in the financial year 2014-2015 as only payment from his previous employee. my query is at what amount TDS should be deducted, i.e. on rs 2.94 lacs or only on rs. 0.94 lacs. and what should be the rate of TDS to be deducted.

Rupesh Jain

Rupesh Jain (Expert)

11 April 2014 taxable as salary
amount will exempt lower following.

1)before retirement month average salary of 30 days for every complete year of services
2)rs. 300000
3) 10 month average salary
4) actual received

which ever is less will exempt from the tax.
salary includes basic pay + DA if include for PF/retirement purpose

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