CA Day Offer: Get 10% OFF on CAclubindia Pro 1-Yr & 2-Yr Plans. Subscribe Now!

Tax rules when full & final settlement happens in next fy

1644 views 1 replies

Sagar

sr consultant

24 Points Posted on 27 November 2013

Hi All,

I last working day at previous organization was 3rd april 2013. I received full and final settlement in April 2013. The components of full and final settlement were as below -

1. Salary for March 2013 (which was held as all companies hold last month salary)

2. Annual variable payout for 2012-13. This is annual component and is credited in March every year (happens in IT industry)

3. Leave encashment ( out of 21 leaves 19 were pertainig to FY 2012-13 and 2 pertaining to FY 2013-14 for april 2013. Leaves are credited 2 per month)

4. Salary for April 2013 (3 days salary)

But my previous employer showed all this income as FY 2013-14 income as its credited in April 2013. On previous occasion I have experienced that such income is split between two fiscal years and tax is deducted accordingly in two fiscal years. Can you please let me know how this income should have been taxed by my previous employer ? As i am arguing with them that their practise is wrong.

Thanks

Sagar

Replies (1)

Shifin Francis

2 Points Posted on 05 June 2020

Hi Sagar,

I have a similar query and based on all my search over the internet I found that the salary is taxable on "due basis" or "receipt basis" whichever is EARLIER. So March salary is due of March FY 12-13 and has to be taxed to Income Tax in FY12-13 itself.

Please reply what was your conclusion.