The acknowledgement portion in the given form is not as per statute but I have put it for the convenience of HR Persons.
26th June 2019 From India, Kannur
I have below questions regarding the applicability of income tax (and exemption thereon) on leave encashment (for leave standing to an employee's credit at the time of resignation and relieving) payable to private limited company employees (non-government) and income tax working on total salary payments: -
1) Will tax exemption apply (fully or partially) u/s 10(10AA)(ii) for non-govt employees subject to applying the least of four conditions (such as Cash equivalent to earned leave as per IT rules (leave credit in months * 10 months' average salary) OR 10 times of average monthly salary OR Maximum amount exempted (Rs 3 lakhs including amounts received from prior employers if any) OR Actual amount of leave encashment received on relieving--whichever is the least of these)?
2) When an employee is relieved on 21st of a month, say June, in order to calculate the average salary of 10 months preceding retirement/relieving, should it include the month Jun also (i.e. from the last September to June) OR the salary of 10 months prior to June (i.e. from the last August to May excluding June in which one is relieved) to be considered for average salary calculation?
3) For income tax working for 3 months in the current fiscal, will standard deduction of Rs.50000/- fully apply?
Thank you in advance for your support.
26th June 2019