| S.No. | Particulars | Benefits | ||
|---|---|---|---|---|
| (a) Leave Encashment | ||||
| 1 | Encashment of unutilized earned leave at the time of retirement of Government employees U/S 10(10AA) | Fully Exempt | ||
| 2 | Encashment of unutilized earned leave at the time of retirement of other employees (not being a Government employee) U/S 10(10AA) | Least of the following shall be exempt from tax: | ||
| a) Amount actually received | ||||
| b) Unutilized earned leave* X Average monthly salary | ||||
| c) 10 months Average Salary** | ||||
| d) Rs. 3,00,000 | ||||
| *While computing unutilized earned leave, earned leave entitlements cannot exceed 30 days for each year of service rendered to the current employer | ||||
| **Average salary = Average Salary*** of last 10 months immediately preceding the retirement | ||||
| ***Salary = Basic Pay + Dearness Allowance (to the extent it forms part of retirement benefits)+ turnover based commission | ||||
| (b) Retrenchment Compensation | ||||
| 1 | Retrenchment Compensation received by a workman under the Industrial Dispute Act, 1947(Subject to certain conditions). U/S 10(10B) | Least of the following shall be exempt from tax: | ||
| a) an amount calculated as per section 25F(b) of the Industrial Disputes Act, 1947; | ||||
| b) Rs. 5,00,000; or | ||||
| c) Amount actually received | ||||
| Note: | ||||
| i.Relief under Section 89(1) is available | ||||
| ii. 15 days average pay for each completed year of continuous service or any part thereof in excess of 6 months is to be adopted under section 25F(b) of the Industrial Disputes Act, 1947. | ||||
| | ||||
| (G)ratuity | ||||
| 1 | Gratuity received by Government Employees (Other than employees of statutory corporations) U/S 10(10)(i) | Fully Exempt | ||
| 2 | Death -cum-Retirement Gratuity received by other employees who are covered under Gratuity Act, 1972 (other than Government employee) (Subject to certain conditions). U/S 10(10)(ii) | Least of following amount is exempt from tax: | ||
| 1. (*15/26) X Last drawn salary** X completed year of service or part thereof in excess of 6 months. | ||||
| 2. Rs. 10,00,000 | ||||
| 3. Gratuity actually received. | ||||
| *7 days in case of employee of seasonal establishment. | ||||
| ** Salary = Last drawn salary including DA but excluding any bonus, commission, HRA, overtime and any other allowance, benefits or perquisite | ||||
| 3 | Death -cum-Retirement Gratuity received by other employees who are not covered under Gratuity Act, 1972 (other than Government employee) (Subject to certain conditions). U/S 10(10)(iii) | Least of following amount is exempt from tax: | ||
| 1. Half month's Average Salary* X Completed years of service | ||||
| 2. Rs. 10,00,000 | ||||
| 3. Gratuity actually received. | ||||
| *Average salary = Average Salary of last 10 months immediately preceding the month of retirement | ||||
| ** Salary = Basic Pay + Dearness Allowance (to the extent it forms part of retirement benefits)+ turnover based commission | ||||
| (d) Pension | ||||
| 1 | Pension received from United Nation Organization by the employee of his family members U/S - | Fully Exempt | ||
| 2 | Commuted Pension received by an employee Central Government, State Government, Local Authority Employees and Statutory Corporation U/S 10(10A)(i) | Fully Exempt | ||
| 3 | Commuted Pension received by other employees who also receive gratuity U/S 10(10A)(ii) | 1/3 of full value of commuted pension will be exempt from tax | ||
| 4 | Commuted Pension received by other employees who do not receive any gratuity U/S 10(10A)(iii) | 1/2 of full value of commuted pension will be exempt from tax | ||
| 5 | Family Pension received by the family members of Armed Forces U/S 10(19) | Fully Exempt | ||
| 6 | Family pension received by family members in any other case U/S 57(iia) | 33.33% of Family Pension subject to maximum of Rs. 15,000 shall be exempt from tax | ||
| (e) Voluntary Retirement | ||||
| 1 | Amount received on Voluntary Retirement or Voluntary Separation (Subject to certain conditions) U/S 10(10C) | Least of the following is exempt from tax: | ||
| 1) Actual amount received as per the guidelines i.e. least of the following | ||||
| a) 3 months salary for each completed year of services | ||||
| b) Salary at the time of retirement X No. of months of services left for retirement; or | ||||
| 2) Rs. 5,00,000 | ||||
| (f) Provident Fund | ||||
| 1 | Employee's Provident Fund U/S - | For taxability of contribution made to various employee's provident fund and interest arising thereon see Note . | ||
Tax treatment in respect of Employers Contribution made to and payment from it are summarized below:
* Salary = Basic Pay + Dearness Allowance (to the extent it forms part of retirement benefits) + turnover based commission
Payment from recognized provident fund shall be exempt in the hands of employees in following circumstances:
a) If employee has rendered continue service with his employer (including previous employer, when PF account is transferred to current employer) for a period of 5 years or more
b) If employee has been terminated because of certain reasons which are beyond his control (ill health, discontinuation of business of employer, etc.)