How is pl encashment taxable on retirement.
Ashok Kumar Sharma
(Querist) 03 May 2018
This query is : Resolved
I have retired from PSU Bank job on 31.03.2018. Amount of PL Encashment has been paid/credited to my account on 03-04-2018. Is this amount taxable in the FY17-18 or FY18-19. However my Bank has deducted tax on this amount in FY17-18. Please clarify. Further my income-tax register include the amount of 240 privilege leaves encashment as "PL Retiree" in the salary of march 18 month whereas the amount has actually been paid in April 18 month. (Retirement date 31-03-2018). Priviledge leave upto 270 days can be accumulated by an employee during service period, out of which 240 is encashed on the date of superannuation/ retirement. I have retired on attaining superannuation age. Please clarify.
Guest
(Expert) 04 May 2018
Repeated query. Earlier query already replied by experts at the following thread:
http://www.lawyersclubindia.com/experts/Treatment-of-pl-encashment-on-retirement-680181.asp
However, if unconvinced, better consult some CA in person.
R.Ramachandran
(Expert) 04 May 2018
In terms of Section 10 In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included—
(10AA) (i) any payment received by an employee of the Central Government or a State Government as the cash equivalent of the leave salary in respect of the period of earned leave at his credit at the time of his retirement whether on superannuation or otherwise ;
(ii) any payment of the nature referred to in sub-clause (i) received by an employee, other than an employee of the Central Government or a State Government, in respect of so much of the period of earned leave at his credit at the time of his retirement whether on superannuation or otherwise as does not exceed ten months, calculated on the basis of the average salary drawn by the employee during the period of ten months immediately preceding his retirement whether on superannuation or otherwise, subject to such limit as the Central Government may, by notification in the Official Gazette, specify in this behalf having regard to the limit applicable in this behalf to the employees of that Government :
Provided that where any such payments are received by an employee from more than one employer in the same previous year, the aggregate amount exempt from income-tax under this sub-clause shall not exceed the limit so specified :
Provided further that where any such payment or payments was or were received in any one or more earlier previous years also and the whole or any part of the amount of such payment or payments was or were not included in the total income of the assessee of such previous year or years, the amount exempt from income-tax under this sub-clause shall not exceed the limit so specified, as reduced by the amount or, as the case may be, the aggregate amount not included in the total income of any such previous year or years.
Explanation.—For the purposes of sub-clause (ii),—
the entitlement to earned leave of an employee shall not exceed thirty days for every year of actual service rendered by him as an employee of the employer from whose service he has retired ;
Dr J C Vashista
(Expert) 05 May 2018
Very well explained by taxation expert Mr. R Ramachandran.
However, I think the query of author qua the tax on income earned as leave encashment at the time of his retirement from Bank service remained "unanswered", since just copying the provision of act shall not serve his purpose which require some more information.
Dr J C Vashista
(Expert) 05 May 2018
There is no need to repeat same story time and again, it is bad, absurd and ridiculous.
If you are not satisfied with response from experts you should have consulted a local CA.
T. Kalaiselvan, Advocate
(Expert) 06 May 2018
The querist posted the same question earlier in another thread, where his question was properly addressed by many experts.
In this thread also has been advised properly about next course of action on this, hope he do not repeat the same question again
