salary

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Hardeep Singh (Querist)
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22 February 2011 At retirement on 20/2/10 X(non-Govt. employee) received 250000/- as leave salary.
basic pay - 15000p.m.
service duration : 26 years
leaves credited to X at the time of retirement: 25 months,entitlement of leave salary: 60day's salary for each year of service and leave availed in service time: 27 months
find taxable amount under salary
sir please give your workings clearly

CA. Lohith Jagadeesh

CA. Lohith Jagadeesh (Expert)
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22 February 2011 Hi,

Ayr :11-12,
Pyr :10-11

Step 1

Calculation of Leave Credit available to the Employee

Leave Credit available
{Company leave or Income Tax Act leave (max 30 days for every completed year of Service} which ever is lesser.

52 months {as per company @ 60 days per year of completed service given}
OR
25 months {as per Income Tax Act @ 30 days per year of completed service}

which ever is Lesser

There Total Credit Available is only 25 months

but Leave already availed is 27 months

Therefore there will not be any Leave Credit left to Such empolyee

Step 2: Workings

Calulation of Taxable Leave Salary

Particulars Amount
Actual Leave Salary Received - 250000
Least of the following is
Exempt
1)Actual Leave Salary -250000
2)Govt Amount -300000
3)Leave Credit Available*
10 Months Avg salary - 0
4)10 Months' Salary(WN) -150000
0
__________
Taxable Leave Salary 250000

Note:
Salary for the purpose of Leave Salary is
Basic PAy + DA {if provided in terms of Employment}+ Commission as a percentage of Turnover achieved by the Employee

Given by the Supreme Court in
"Gestetner Duplicators Pvt. Ltd. V/s CIT
(1979)117 ITR 1 (SC)"

Hope i have Resolved your issue

Regards
CA.Lohith.J
B.Com,ACA,CS,(ICWA),SAPM Hons,ITR Hons

Hardeep Singh

Hardeep Singh (Querist)
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23 February 2011 excuse me sir under step 1 leave credit available as per Income Tax Act @ 30 days per year of completed service should not be of 26 months (i.e.26 years * 1 month)

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CA. Lohith Jagadeesh

CA. Lohith Jagadeesh (Expert)
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23 February 2011 Hi,
I understand that it is 26 months, but in you question above it is given as 25 months. The workings where based on the Question given.
{if u had meant total of 52 months less 27 months = 25 months from the company, then please frame the question correctly, as it may lead to multiple Interpretations}

However even considering 26 months, the Solution would not Change.

Regards
CA.Lohith.J
B.Com,ACA,CS,(ICWA),SAPM Hons,ITR Hons