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Gratuity & leave encahement- taxability

Ankit Somani (CA CS) (144 Points)

17 January 2019

Dear Friends,

Pls help me on tax perspective.. I have switched the job ( 7 years of service of Ist Job).

I have received Leave enashment & Gratuity. Please let me know whether it is taxable or exempt on resignation & joining new company...

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7 Replies

Ruchika Somani (Coaching and Practice in Tax Audit Law.) (4429 Points)
Replied 17 January 2019

If you are carrying forward that amount in new company then its not taxable and if you are withdrawing amount then exempt upto specified limits.

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 17 January 2019

leave encashment received is taxable as salary and it is included in your taxable income. no tax benefit on joining new co.
gratuity actually received is exempt by reducing least of the below:
1. avg. last 10 months salary *no of yrs of service/2
2.Rs.20 lacs
3. Gratuity actually received

Ruchika Somani (Coaching and Practice in Tax Audit Law.) (4429 Points)
Replied 17 January 2019

Mr. giridhar then leave encashment is exempt in which scenario?

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 17 January 2019

only when it is received on retirement it is exempt

Ankit Somani (CA CS) (144 Points)
Replied 17 January 2019

There is some provision that if we receive during service then same is not exempt. However when we switch job & join new company, whether we can take exemption. If so, then how much.