Taxexcel: Salary

Tuesday 28 March 2017

If Leave salary encasement is received by any employee while in employment then it is fully taxable in the hands of an employee. While if leave encasement is received in the case of retirement or superannuation or resignation, then the exemption is available up to the following limits.

Download Automated Income Tax Form 16 Part A & B for FinancialYear 2016-17 & Assess Year 2017-18 [ This Excel Utility can prepare at a time 100 employees Form 16 Part A& B]

In case of Central government or State government employee(excluding employees of a local authority or statutory corporation) – Fully Exempt

In case of any other employee –

Least of the following is exempt:-

· Actual amount received

· 3,00,000

· 10 months average salary

· Average salary x leaves at the credit of an employee (leaves cannot exceed 30 days for every completed year of service, fraction of a year is to be ignored)

Salary includes basic pay, dearness allowance(if it forms part of the retirement benefits) and percentage wise fixed commission on turnover

Average Salary = Average of salary drawn in the last 10 months immediately preceding the date of retirement.

If leave encasement is received by an employee from more than one employer in the same previous year or in different previous years the aggregate maximum amount exempt from tax on account of leave encasement cannot exceed Rs. 3,00,000.

Leave salary paid to the legal heirs of the assessee, who dies during the employment will not be taxable.

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Wednesday 22 February 2017

If Gratuity is received by any employee while in employment then it is fully taxable in the hands of an employee. While if gratuity is received in the case of death or retirement or resignation, then the exemption is available up to the following limits.

In the case of Government employee – Any gratuity received by an employee of Central Government, State Government or local authority is wholly exempt from tax. This exemption is not available to employees of Statutory Corporation.

In case of employees covered by Payment of Gratuity Act –

An amount equal to the least of the following will be exempt from tax

· 15/26 x Salary last drawn x No. Of completed years of service or part thereof in excess of 6 months.

· 10,00,000

· Gratuity actually received

Notes:

In the case of seasonal establishments, 15 days is substituted by 7 days.

Salary includes basic salary and dearness allowance but does not include bonus, commission, overtime wages or any other allowance.

Part of a year exceeding six months is taken as a complete year.

Download Automated Arrears Relief Calculator U/s 89(1) with Form 10E

In case of any other employee –

An amount equal to the least of the following will be exempt from tax

· ½ x Average salary of last 10 months preceding the month of retirement x Completed year of service (fraction of a year is ignored)

· 10,00,000

· Gratuity actually received

Notes:

Salary includes basic pay, dearness allowance to the extent it forms part of retirement benefits and percentage wise fixed commission on turnover.

If gratuity is received by an employee from more than one employer in the same previous year or in different previous years the aggregate maximum amount exempt from tax on account of gratuity cannot exceed Rs. 10,00,000.

If an employee had also rendered service to any other employer, then the period of service to such former employer is also included while calculating “completed the year of service” subject to the condition that any gratuity is not received from such former employer.