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
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)"
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)
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.
CAclubindia
