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TDS on leave encashment of deceased person

10 February 2019

Leave encashment of deceased PSU Bank staff amounts to Rs. 6,00,000/-. Is TDS applicable? If not, please clariry. If so, how to calculate?

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Prateek Mundra (Industrial Trainee- HUL) (63 Points)
Replied 11 February 2019

Leave salary paid to the legal heir of deceased employee is not taxable as salary. [Circulars Letter No. F.35/1/65-IT(B), dated 5/11/19 65 ]. Further, leave salary by a legal heir of the Government employee who died in harness is not taxable in the hands of the recipient [Circulars No.309, dated 3/7/1981 ].

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