I want to know regarding gratuity and leave encashment taxable or not taxable during resignation and retirement .
From India
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1From India
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Leave encashment of accumulated leave is taxable as follows:
a) If you are not a central or state government employee, leave encashment actually received/10 months average salary/300000/cash equivalent of unavailed leave on the basis of 30 days leave for each year of completed service. Section 10(10AA) of the IT Act is relevant. Salary here means = Basic + dearness allowance + turnover-based commission. This is for information.
However, cross-check with your CA before acting upon this advice for your satisfaction.
From India, Pune
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a) If you are not a central or state government employee, leave encashment actually received/10 months average salary/300000/cash equivalent of unavailed leave on the basis of 30 days leave for each year of completed service. Section 10(10AA) of the IT Act is relevant. Salary here means = Basic + dearness allowance + turnover-based commission. This is for information.
However, cross-check with your CA before acting upon this advice for your satisfaction.
From India, Pune
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Dear Bharat.T@Adityabirla.Com,
Answer to you is as follows:
As regards to Gratuity at the time of resignation and retirement:
- For Govt. employees: no Tax
- For other than Govt. employees or Gratuity as per POG Act: exemption up to Rs. 10 lacs.
- If gratuity was received in earlier years, the exemption at the time of retirement will reduce to that extent, subject to the overall limit of 10 lacs.
As regards to leave encashment on resignation and retirement:
- For Govt. employees: no Tax
- For other than Govt. employees: exemption on the least of the following:
1. Leave encashment actually received
2. Average salary of 10 months
3. Equivalent to a maximum of 30 days of unavailed leave, if any, per every year of completed service
4. Rs. 3 lacs.
Salary for this purpose is only Basic + DA.
Feel free to correct me if I am mistaken.
From India, Mumbai
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Answer to you is as follows:
As regards to Gratuity at the time of resignation and retirement:
- For Govt. employees: no Tax
- For other than Govt. employees or Gratuity as per POG Act: exemption up to Rs. 10 lacs.
- If gratuity was received in earlier years, the exemption at the time of retirement will reduce to that extent, subject to the overall limit of 10 lacs.
As regards to leave encashment on resignation and retirement:
- For Govt. employees: no Tax
- For other than Govt. employees: exemption on the least of the following:
1. Leave encashment actually received
2. Average salary of 10 months
3. Equivalent to a maximum of 30 days of unavailed leave, if any, per every year of completed service
4. Rs. 3 lacs.
Salary for this purpose is only Basic + DA.
Feel free to correct me if I am mistaken.
From India, Mumbai
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