Income Tax on Retirement Benefits|Pension|Gratuity|Provident Fund|VRS|Leave Encashment | Taxpundit
In this video we will learn about the tax treatment of various retirement benefits.
[1]. Leave Encashment :
(A) Encashment of leave during the continuation of service :
Leave encashment received during continuation of service by Government or nonGovernment employees is charged to tax in the year of such encashment. However, relief under section 89 is available.
(B) Encashment of leave at the time of retirement :
Encashment of leave at the time of retirement can further be classified as :
(i) Tax treatment in the hands of Central Government or State Government employees:
In case of a Central Government or State Government employee, any amount received for encashment of accumulated leave at the time of retirement/superannuation is exempt from tax under section 10(10AA)(i).
(ii) Tax treatment in the hands of other employees:
In case of non-Government employees (i.e., other than the Central or the State Government employees), leave salary exempt from tax under section 10(10AA)(ii) will be least of the following:
1. Period of earned leave in months × Average monthly salary
2. Average monthly salary × 10 (i.e., 10 months’ average salary)
3. Maximum amount as specified by the Central Government i.e., Rs. 3,00,000
4. Leave encashment actually received at the time of retirement
[2] Gratuity :
Tax treatment of gratuity can be classified as follows:
(A) In case of a Government employee, any death-cum-retirement gratuity received is wholly exempt under section 10(10)(i). It should be noted that employees of statutory corporation will not fall under this category.
(B) Gratuity received by non-Government employees :
This category will further be classified as follows :
(1) Exemption in respect of gratuity in case of employees covered by the Payment of Gratuity Act, 1972.
(2) Exemption in respect of gratuity in case of employees not covered by the Payment of Gratuity Act, 1972.
3. [Pension] :
Pension can be in any of the following forms:
(a) Uncommuted pension is a periodic payment received after retirement.
(b) Commuted pension is a lump sum payment in lieu of periodic pension.
(c) An employee may (depending upon his service rules) partly commute his pension and receive the balance as periodic payments (i.e. uncommuted).
As per section 10(10A)(i), any commuted pension is exempt in the hands of a Government employee. In case of non-Government employee exemption in respect of commuted pension will be as follows :
If the employee receives gratuity, one third of full value of commuted pension will be exempt from tax under section 10(10A)(ii)(a).
If the employee does not receive gratuity, one half of full value of commuted pension will be exempt from tax under section 10(10A)(ii)(b).
4. [Compensation received at the time of voluntary retirement or separation]
is exempt from tax, if the following conditions are satisfied:
Compensation is received by an employee of an undertaking specified in section 10(10C).
Compensation is received in accordance with the scheme of voluntary retirement/separation, which is framed in accordance with prescribed guidelines. (for guidelines see Rule 2BA).
Maximum amount of exemption is Rs. 5,00,000.
Where exemption is allowed to an employee under section 10(10C) for any assessment year, no exemption under this section shall be allowed to him for any other assessment year.
Relief under section 89 is admissible in respect of such amount.
With effect from assessment year 2010-11, section 10(10C) has been amended to provide that where any relief has been allowed to an assessee under section 89 for any assessment year in respect of any amount received or receivable on his voluntary retirement or termination of service or voluntary separation, no exemption under
section 10(10C) shall be allowed to him in relation to such, or any other assessment year.
5. [Payment from provident fund]
From taxation point of view provident funds can be classified as follows and Amount received at the time of termination of service is taxed as under :
Statutory provident fund = Exempt
Recognised provident fund = If certain conditions are satisfied, then lump sum amount is exempt from tax
Un-recognised provident fund = Payment on termination will include four components, viz, employee’s contribution and interest thereon and employer’s contribution and interest thereon. The tax
treatment of such payments is as follows :
i. Employee’s contribution is not charged to tax; interest thereon is taxed under the head “Income from other sources”.
ii. Employer’s contribution as well as interest thereon will be taxable as salary income. However, relief under Section 89 will be available.
Public provident fund = Exempt
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बहुत अच्छी तरह से समझा दिया है आपने । धन्यवाद ।
All points cleared . Thanks ❤️
Good evening sir, very good explanation sir, thank you very much sir. It is very essential to all pensioners
Very good video. Thanks for uploading this valuable video.
Sir, Your videos are very very helpful and your sound is very clear. Very very thanks.
@TaxPundit
5 жыл бұрын
Thanks for the appreciation.
Very Good . All points well explained
Excellent guidance Thanks very much.
सराहनीय !
सर, अति सुंदर जानकारी एवं विश्लेषण।। 🌺🌺👌🙏।।
Sir Namaskar, I like this video very much.My problem solved this video. God bless U.
बहुत बहुत धन्यवाद।
Whether a pensioner retired in a particular FY can claim House rent claim under 80GG for the remaining months after his retirement ??
Thank you Sir!! Very helpfull Video
@TaxPundit
5 жыл бұрын
Welcome Sir
Bahut badhiya sir very nice video
@TaxPundit
4 жыл бұрын
Thanks
Bahut badiya mahiti di hai sir
Excellent
Sir, Very nice information. Thanks.
Sar good mahiti api thanks
good information so many thanks
Sir , I am a pensioner.( super annuation )My Dept was central govt and afterwards it has been converted into a PSU. After retirement I have received Rs 350000/- as leave encashment from previous govt. Dept and Rs 460000/- from PSU. I think Rs 350000/- is fully exempted and Rs 160000/- ( I.e. 460000 - 300000 ) is taxable. Am I right sir ? And same is to be applied for gratuity , GPF , Commutation received ? Please reply. Thank you .
Sir, I am a retired Bank employee. A message has been circulated on social media which states that amendment is carried out & leave encashment after retirement is fully exempted for non govt employees too. (Following a case filed by some non govt employees) . Is this true ? A no of retired employees have claimed the exemption & have received the refund too. Pl advise .
Thnku sir
Very beautiful Thank you so much 🥰😊
Sir, my collegue retired in february 2022. his full and final settlement was done by the HR dept in the month of march and tax was to deducted but the finance Dept could not pay the final amount in the month of march and payment was to be credited in the new financial year ie 2022-23. which tax bracket will he be assessed by income tax how does he stand to benefit or loose because of taxesation
hello sir actually my father worked in chennai customs dept and expired .i am applied for compassionate appointment but it was rejected on behalf of receiving terminal benefits 4,50,000 and above for group c posts.then i enquired in accounts dept they have given a copy 3,43,000 only received. but they have rejected again saying 6,42,000 as terminal benefits (including gpf amount). So my question is whether GPF comes under death terminal benefits or not? if not then i need a circular or proof sir very urgent please reply sir.
Thank you so much Sir.....Best Wishes !
Nice information.
Good information
Thank U Sir for yr kind information. God bless U. Long leave sir.
Total income is more than 50 lac including Employee's contribution of PF(own deposit) & other non-taxable retirement benefits. Whether ITR-2 is applicable or ITR-1 will do ?
Thanks sir listen your video so benifited I have taken VRS in scale 3 retired on 11.11.2019 I have received leave encashment 8 months but but is deducted amount above three lacs
where to show retiring benefits in ITR-I as income and as exemption when gross income is more than once crore
sir in case of termination of services income exempt like leaveencashment, gratuity, compensation etc which is different retirement
Great
Very good
You r rockstar ...love you
@TaxPundit
5 жыл бұрын
Thank you Sir. Thanks for the appreciation. Stay tuned for more videos.
Information is good
Good Video Sir
Fabulous sir
Very well explained 🙂
Thanks for your guidance. Kindly advice how GPF received by the govt employee received on retirement is to be shown in income tax return
Thanks a lot manyvar
Thank-you sir
Thank you very much for info
Thanks many douts cleared
Thanks Sir
@TaxPundit
4 жыл бұрын
Welcome
Good..
Very informative
Superb
I could not understand clearly but important part this is
Which ITR form can be used if someome gets more than 50 lakhs at the time of retirement along with salary.
Sir pl explain the section under which GPF is tax free
THANK YOU SIR
From this video all my doubts have been cleared.. Thanks for nice explanation.
@TaxPundit
3 жыл бұрын
Thanks for kind words.
why non govt employee are butchered with bloody formulas's. What crime they did by not being employed my govt.
THE EMOLOYEE OF CIVIC BODY i.e.MCGM is govt employee or non govt employee?
If a government employee take some final withdrawal from the gpf account, then what will be adverse effects on retirement benefits?
In govt company, CPF included employee and company contribution, please inform, is both contributed amount is taxable or taxfree
How is the contribution of employee towards PF taken in employee ITR? And in which year? Year of accrual?
Really very helpful !! Thanks for posting this sir .
@TaxPundit
4 жыл бұрын
Welcome. Stay tuned for more videos.
Thanks for guide
Provision on payment of tax on term deposit in sBI for a retired govt.employee.
Sir , the section -10 exemptions of gratuity ,committed pension and leave encashment for govt employee are exempted under new regime or not? Kindly throw light on it.
Sir, Punjab State Power , Corporation Ltd.(PSPCL)which is governed owned corporation, employees of PSPCL can be treated as Government Employees for the purpose of IT act rule 10(10AA) or not
Sir, How to show the superannuation amount for which tax has been deducted by the company
Sbi smart life, investing 1 lakh each year for five years,am i eligible for tax rebate 1 lakh everyyear under 80ccc, kindly reply sir.
Unless you tell the exact amount exempted / non exempted, what's the value? Only useful if I'm a lawyer and understand sections.
Sir, Any amount received from the sale of own property, that amount received so may come under taxable amount?
Thanks.
Very nice ji
Composite tranfer grant , transportation of personal goods and travel allowances at the time of retirement are exempt under which section from income tax act.
Sir, we few senior citizens were retired from Central govt. on 31.12.2020. Leave encashment, Gratuity, PF etc. were shown as exempted income in ITR for FY 2020-21. After one year of retirement, due to increase of DA of corona period is released by govt., in FY 2021-22. As such, we have received arrears of Leave incashment and arrears of Gratuity of FY 2020-21 in FY 2021-22. These arrears are exempted. Kindly enlighten us where to get these arrears as exempted in ITR. Whether 10E is mandatory for these arrears, if yes, there is no provision to show leave encashment arrears in 10e. What should be we.kindly teach us.
Thankyou Sir
Thank you very much. Sir, I want to know is (a) Insurance money ( for premium deposited from salary during service as group insurance ) received during retirement & (b) Composite transfer grant received during retirement taxable or tax exempted income? In which column I will show these income? Please help me to know this so that i can fill ITR accordingly. Thanking you.
Sir Ex gratia ke under monthly financial assistance tax free hai
Thanks
Sir, is the benefits received from GIS (Group Insurance Scheme) is taxable. I am retired from Central Government service.
GPF received during/after retirement fully exempted from Income Tax? Please let me know Sir
Good
@CA Puneet Jain sir if an individual getting pension rs.272000/- per fy and another salary rs.9 lakh then he will get some exemption on pension amount in ITR 1? Please reply
If CPF non refundable amount taken from employee contribution during service period then it will be taxable ? It’s government under taking company.
Sir I retired from public sector bank in FY 2020-2021, and bank has deducted tax on full amount, after Rs. 3 lac relief, given as leave encashment on retirement. Am I eligible for refund of the tax deducted by bank on the full leave encashment amount on retirement upon tax filing now.
How many days after retirement (Central govt) can he get leave encashment in Postal Department?
SIr, please guide where to show GPF amount received after retirement..? Also, where to show CGEGIS amount received after retirement amount in ITR 2?
Although the Retirement benefits received by a central government employee is not taxable, are the amounts to be reflected in the ITR?
@surajparkashsharma4190
2 жыл бұрын
Yes
Which form is to be used itr 1 or itr 2?
Beneficial to all.Thanks
Sir I heard somewhere that state government employee cannot get leave encashment for more then rs 3 lakh. Is it true?
Sir i had been retired from the govt service on 30.4.2017 company has deducted tds on earned leave encashed. Now i can claim for refund in ITR 2022-23, pl advise
Sir, my wife is getting monthly pension of our dependent minor child who is suffering from specific disease and government is paying some amount as pension to such persons. Where in ITR, this amount should come? Is it taxable?
Sir whether bank employees of leave encashment at the time of retirement is taxable kindly advise?
if an government employees in his 35 years service period,had absent for 6 years how much money will be deducted from his pf and gratuity benefits and incremental money?sir please guide me.
under which section PPF amount exempted will be shown itr?
Leave encashment on recruitment from LICI kya taxable hai?
Revised pension arrears in case of govt employee taxable or not ???
Sir i got 107000 gratuity through court last year. My income for last FY is only 2 lac only. So can i show my gratuity amount in other source income for itr 1 filling
nicely explained. but how to show the retirement benefits in itr?
My pension is 50900+6108(DA@12%)=57008 pm.I have commutted 1/3rd of my pension ie 50900/3=16966 pm.Thus my pension in hand is 57008-16966=40042 pm.I have to file my ITR considerring my monthly income as 57008 pm or 40042 pm.kindly reply .Thanx
PLEASE HELP. My father is going to retire on 4 july 2022. If he get 30lakhs lets say as total money including all will it be counted as GROSS SALARY in IT Returns. How the retirement money will be shown in IT Returns or it will not be seen.
Dear sir, If I have submitted my pan card at the time of opening account but bank have not updated my pan card by mistake and bank have deducted my TDS on my interest of FDRs. The TDS did not show in form 26AS. Now what I can doo....????
@TaxPundit
4 жыл бұрын
Contact bank. They need to rectify their TDS Return.