Tax Liability on Leave Encashment
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sadanand purushottam shahapure
Jul 9, 2011, 2:20:43 AM7/9/11
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Sir,
I retired voluntarily from Bank of Maharshtra in
July,2010.Apart from other retirement benefits, I received an
amount of Rs 3.92 lacs as 8 months Privilege Leave encashment,
(being I am pension optee).
Now my question is whether entire amount of Rs 3.92 lacs
is exempted from tax?
As per Income Tax Act, the amount is fully exempted to
Central or State Govt employees only.
Whether nationalised bank employee can be treated as
'Central Govt Employee' to claim exemption?
As per bank authority's opinion, the exemption is restricted
upto Rs 3 lac (as per I T Act), and remaining Rs 0.92 lac are taxable.
They have added Rs 0.92 in my 'salary income' while issuing me
Form 16, for filing the tax return. Whether this is correct?
Please guide me.
S.P.SHAHAPURE,
AHMEDNAGAR(Maharshtra)
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I retired voluntarily from Bank of Maharshtra in
July,2010.Apart from other retirement benefits, I received an
amount of Rs 3.92 lacs as 8 months Privilege Leave encashment,
(being I am pension optee).
Now my question is whether entire amount of Rs 3.92 lacs
is exempted from tax?
As per Income Tax Act, the amount is fully exempted to
Central or State Govt employees only.
Whether nationalised bank employee can be treated as
'Central Govt Employee' to claim exemption?
As per bank authority's opinion, the exemption is restricted
upto Rs 3 lac (as per I T Act), and remaining Rs 0.92 lac are taxable.
They have added Rs 0.92 in my 'salary income' while issuing me
Form 16, for filing the tax return. Whether this is correct?
Please guide me.
S.P.SHAHAPURE,
AHMEDNAGAR(Maharshtra)
 |
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PM
Jul 9, 2011, 4:06:20 AM7/9/11
to bankpensioner
Dear Mr.Sadanand Purushottam,
Here the pertinent question is
whether Bank employees comes under Ist catagory or 2nd catagory?
While calculating the taxability on leave encashment amount bank has
treated bank employee under catagory No2.
As per Income Tax 1961-.{section 10(10AA)(i)}
01. Leave salary given to Central/State Government employees at the
time of retirement /superannuation in respect of period of earned
leave at his credit ,is fully exempted.
and
02.Under Sec.{section 10(10AA)(ii)} Leave salary given to other
employee (non Central/State Government employee is exempted as per
detail below:-
The least amount of :
1.Leave encashment Actually received. /Last 10 Month average salary./
3.Maximum amount fixed by the Government from time to time (At present
Rs 3 lakhs)/4.Cash equivalent of salary in respect of the period of
earned leave to the credit of the employee only at the time of
retirement whether on superannuation or otherwise calculated maximum
by 30 days maximum for every year of actual service rendered to
employer from whose he has retired.
The maximum amount of Rs 3 lakhs was last revised in 1998 and after
that period DA of the employee has been increased by 100 % but this
amount has not been increased.
Notification : No. SO 588(E), dated 31-5-2002
"As per the powers conferred by sub-clause (ii) of clause (10AA) of
section 10 of the Income-tax Act, 1961 (43 of 1961), the Central
Government, having regard to the maximum amount receivable by its
employees as cash equivalent of leave salary in respect of the period
of earned leave at their credit at the time of their retirement,
whether superannuation or otherwise, hereby specifies the amount of
Rs. 3,00,000 (rupees three lakhs only) as the limit in relation to
employees mentioned in that sub-clause who retire, whether on
superannuation or otherwise, after the 1st day of April, 1998."
On Jul 9, 2:20 am, "sadanand purushottam shahapure"
Here the pertinent question is
whether Bank employees comes under Ist catagory or 2nd catagory?
While calculating the taxability on leave encashment amount bank has
treated bank employee under catagory No2.
As per Income Tax 1961-.{section 10(10AA)(i)}
01. Leave salary given to Central/State Government employees at the
time of retirement /superannuation in respect of period of earned
leave at his credit ,is fully exempted.
and
02.Under Sec.{section 10(10AA)(ii)} Leave salary given to other
employee (non Central/State Government employee is exempted as per
detail below:-
The least amount of :
1.Leave encashment Actually received. /Last 10 Month average salary./
3.Maximum amount fixed by the Government from time to time (At present
Rs 3 lakhs)/4.Cash equivalent of salary in respect of the period of
earned leave to the credit of the employee only at the time of
retirement whether on superannuation or otherwise calculated maximum
by 30 days maximum for every year of actual service rendered to
employer from whose he has retired.
The maximum amount of Rs 3 lakhs was last revised in 1998 and after
that period DA of the employee has been increased by 100 % but this
amount has not been increased.
Notification : No. SO 588(E), dated 31-5-2002
"As per the powers conferred by sub-clause (ii) of clause (10AA) of
section 10 of the Income-tax Act, 1961 (43 of 1961), the Central
Government, having regard to the maximum amount receivable by its
employees as cash equivalent of leave salary in respect of the period
of earned leave at their credit at the time of their retirement,
whether superannuation or otherwise, hereby specifies the amount of
Rs. 3,00,000 (rupees three lakhs only) as the limit in relation to
employees mentioned in that sub-clause who retire, whether on
superannuation or otherwise, after the 1st day of April, 1998."
On Jul 9, 2:20 am, "sadanand purushottam shahapure"
Dr.dhananjaya Bhupathi
Jul 9, 2011, 10:36:06 AM7/9/11
to bankpe...@googlegroups.com
Dear Shri Sadanandji,
The entire amount of leave encashment @ the time of retirement is totally exempted and Ur arrears of encashment on conversion into new scales in terms of 9th BPS is also exempted.
Dr.Dhananjaya Bhbupathi,
S.B. Pensioner.
PS., I hope U r already a member of BOM retirees Association. Lest, U may join for strengthening AIBRF for the common benefit of all retired bank employees.
From: sadanand purushottam shahapure <To: bankpe...@googlegroups.com
Sent: Sat, 9 July, 2011 11:50:43 AM
Subject: bankpensioner Tax Liability on Leave Encashment
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PM
Jul 9, 2011, 11:11:56 PM7/9/11
to bankpensioner
Dear Dr.Dhannjaya Bhupati,
May I correct your answer as follows?
As per Income Tax 1961-.{section 10(10AA)(i)}
employee (non Central/State Government employee is exempted at present
up to a limit of Rs.3 lakhs only .
In the instant case Bank has deducted tax on excess amount of Rs.92
thousand based on above guidelines applicable to Non central govt
employees.
On Jul 9, 10:36 am, "Dr.dhananjaya Bhupathi" <dracupress...@yahoo.in>
wrote:
May I correct your answer as follows?
As per Income Tax 1961-.{section 10(10AA)(i)}
Leave salary given to Central/State Government employees at the
time of retirement /superannuation in respect of period of earned
leave at his credit ,is fully exempted.
However under Sec.{section 10(10AA)(ii)} Leave salary given to other
time of retirement /superannuation in respect of period of earned
leave at his credit ,is fully exempted.
employee (non Central/State Government employee is exempted at present
up to a limit of Rs.3 lakhs only .
In the instant case Bank has deducted tax on excess amount of Rs.92
thousand based on above guidelines applicable to Non central govt
employees.
On Jul 9, 10:36 am, "Dr.dhananjaya Bhupathi" <dracupress...@yahoo.in>
wrote:
R Balaji
Jul 10, 2011, 1:46:34 AM7/10/11
to bankpe...@googlegroups.com
Yes. what Mohan said is correct.
Balaji
Balaji
Somanathan Nair
Jul 11, 2011, 5:31:49 AM7/11/11
to bankpe...@googlegroups.com
Rs.3 lacs is only expted in this case for taxation....
sadanand purushottam shahapure
Jul 13, 2011, 5:20:38 AM7/13/11
to bankpe...@googlegroups.com
Sir,
The entire amount of exemption is restricted to Central &
State Govt employees,as per the Act.
Whether nationalised bank employee is construed as 'central
govt employee, to claim the full exemption?
On Mon, 11 Jul 2011 08:06:44 +0530 wrote
>Yes. what Mohan said is correct.
Balaji
The entire amount of exemption is restricted to Central &
State Govt employees,as per the Act.
Whether nationalised bank employee is construed as 'central
govt employee, to claim the full exemption?
On Mon, 11 Jul 2011 08:06:44 +0530 wrote
>Yes. what Mohan said is correct.
Balaji
On Sun, Jul 10, 2011 at 8:41 AM, PM wrote:
Dear Dr.Dhannjaya Bhupati,
May I correct your answer as follows?
As per Income Tax 1961-.{section 10(10AA)(i)}
Leave salary given to Central/State Government employees at the
time of retirement /superannuation in respect of period of earned
leave at his credit ,is fully exempted.
However under Sec.{section 10(10AA)(ii)} Leave salary given to other
employee (non Central/State Government employee is exempted at present
up to a limit of Rs.3 lakhs only .
In the instant case Bank has deducted tax on excess amount of Rs.92
thousand based on above guidelines applicable to Non central govt
employees.
On Jul 9, 10:36 am, "Dr.dhananjaya Bhupathi"
Dear Dr.Dhannjaya Bhupati,
May I correct your answer as follows?
As per Income Tax 1961-.{section 10(10AA)(i)}
Leave salary given to Central/State Government employees at the
time of retirement /superannuation in respect of period of earned
leave at his credit ,is fully exempted.
However under Sec.{section 10(10AA)(ii)} Leave salary given to other
employee (non Central/State Government employee is exempted at present
up to a limit of Rs.3 lakhs only .
In the instant case Bank has deducted tax on excess amount of Rs.92
thousand based on above guidelines applicable to Non central govt
employees.
On Jul 9, 10:36 am, "Dr.dhananjaya Bhupathi"
|
Dr.dhananjaya Bhupathi
Jul 13, 2011, 9:36:41 AM7/13/11
to bankpe...@googlegroups.com, mrs.ma...@gmail.com
Dear friends,
I agree with U. When I retired in 2008, all my leave encashment amount was totally exempted in the old scales. ThanQ for amendment of my answer in the light of IT rules vis-a-vis new scales.
I regret for the mistaken assumption.
Dr.DB..
From: Somanathan Nair <>
To: bankpe...@googlegroups.com
Sent: Mon, 11 July, 2011 3:01:49 PM
Subject: Re: bankpensioner Tax Liability on Leave Encashment
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