Clarification on Filling of Income Tax

PF is exempt from service tax after 5 years.

Leave Encashment calculation will be as given below

• Till Rs. 3,00,000/- is exempt.
• Ten months' average salary; 
• Cash equivalent of the leave due at the time of retirement;
• Leave encashment actually received at the time of retirement.

Gratuity limit was 3.50 Lac to 10 Lac wef 24.05.2010-Notification 41/2010 is exempt.

Pension is taxable.

Hi,

1. Leave encashment during the continuity of the of employment is chargeable to tax however relief available under section 89.

However in your case it will not fall in the above case so the provision applicable:

You being Non govt employee will have section 10(10AA)(ii) apllicable so the leave ecashment exempt in your hand will be the least of the following:

a. Period of earned leave (in no. of months) to the credit at the time of leaving the job   X    Average monthly salary.

(eg. 15000 avg salary  X 4 Months = Rs. 60000)

     How to calculate the leave period of earned leave in months? 

     Let take eg. Period of service 5 1/2Years; leave entitlement per year 35 days; leave encashed or          availed 50 days

         i) Total no. of days leave entitled for one year X  Total period of serivce in years  (no part of the year   taken) = X

              35 days X 5 yrs = 175 days

          ii) X - Leave availed or encashed = Y

              175 days - 50 days = 125

          iii) Y / 30 days

               125 / 30 days = 4.167 Months;  round off to 4 months.

         How to calculate the avg monthly salary?

          eg. Basic salary 10000 per month; Dearness allowance 5000 per month in last 10 Months of employment.

         Salary = Basic salary + DA

       (eg.  10000+5000 = 15000)

b) 10 X Avg mnthly salary

(eg. 10 X 15000 = 1,50,000)

c) Rs 300,000

d) actual leave salary received

    ( eg. Rs 70,000)

So the leave encashement in you hand will be least of above which is Rs.60,000/-

2. Gratuity sec 10 (10) least of the following assuming covered by payment of Gratuity act 1972

        a. 15 days salary (last drawn) X Year of service

              Salary  = basic salary + DA

         b. Rs 350000

         c. Grat. actully received

3. PF if the contribution to recognised provident fund

If rendered 5 Years of continous service fully PF received is fully exempt in the hands of employee.

4. Pension is fully taxable.

5. Tax slab for

In case of individual (other than II and III below) and HUF:-

In case of individual being a woman resident in India and below the age of 65 years at any time during the previous year:-