Example:-Mr. X retired from ABC Ltd. on 11th March 2014 after serving for 30 years and 11 months and the employer has paid him leave salary of ₹ 5,00,000. At the retirement, he was getting basic pay of ₹ 22,000. Further he was getting dearness allowance of ₹ 4,000 and 50% of the DA forms the part of salary for retirement benefits. The employee was entitled for 3 months leave for every year of service, but the employee has availed 7 months leave throughout the service and has encashed 4 months leave. Compute leave salary exemption u/s 10(10AA) for the AY 2014-15.
10 August, 2015
Contents
Plus +
Summary
Note
Bookmark
Share
✓ Copied successfully !
Print
Print Options
For full text, please login
Login to TaxTMI
Verification Pending
The Email Id has not been verified. Click on the link we have sent on
Leave salary exemption under section 10(10AA) limited by average salary and statutory caps, yielding the lowest applicable ceiling. Computation of leave salary exemption under section 10(10AA) requires determining average salary by annualising ten months' basic pay plus the proportion ... Summary
Leave salary exemption under section 10(10AA) limited by average salary and statutory caps, yielding the lowest applicable ceiling.
Computation of leave salary exemption under section 10(10AA) requires determining average salary by annualising ten months' basic pay plus the proportion of dearness allowance included for retirement benefits and dividing by ten. Unavailed leave months equal total entitlement minus leaves taken and leaves earlier encashed. The exempt leave salary is the least of (unavailed months x average salary), (ten months' average salary), and the statutory ceilings; the example selects the lowest applicable ceiling as exempt.
Full Summary is available for active users!
Note: It is a system-generated summary and is for quick reference only.
TaxTMI 
TaxTMI 
