Retrenchment Compensation Introduction Entities under pressure to reduce the operational expenditures generally resort to retrenchment of their additional workforce and to compensate the workforce the entities have to pay retrenchment compensation to them. The retrenchment compensation is taxable in the hands of the employees as profit in lieu of salary. Retrenchment compensation paid to a… Read More »
Profits in Lieu of Salary Introduction Profits in lieu of salary refer to specific components deemed as salary payments, including compensation for employment termination, payments from unrecognized provident funds, or under keyman insurance policies. Such amounts are taxable in the hands of employees. Key Inclusions in Profits in Lieu of Salary Compensation for Loss of… Read More »
Employee Provident Fund (EPF) Introduction Employee Provident Fund (EPF) is a statutory retirement benefit scheme for salaried employees, involving monthly contributions by both the employee and employer. The accumulated contributions, along with interest earned, are paid to the employee upon retirement or leaving service. Withdrawals and earnings from EPF are generally exempt from income tax… Read More »
Taxation under Agnipath Scheme The Agnipath Scheme, effective from November 1, 2022, enables recruitment of Agniveers in the Indian Armed Forces for a tenure of four years. The scheme provides specific tax exemptions and deductions under the Income-tax Act. Taxability of Payments to Agniveers Monthly Payments: Taxable under the head “Salaries” as per applicable tax… Read More »
Taxability of Pension Introduction Pension income is taxable under “Salaries.” While an uncommuted pension (paid periodically) is fully taxable, a commuted pension (lump sum) enjoys exemptions under specific conditions. Taxability of Pension Uncommuted Pension: Monthly pensions are taxable as “Salary.” Family pensions are taxable as “Income from Other Sources,” with a deduction of the lower… Read More »
Tax on Leave Encashment Introduction Leave encashment during employment is fully taxable. However, leave encashment at retirement or upon the employee’s death is exempt up to Rs. 25,00,000. Taxability of Leave Encashment Death of Employee Leave encashment paid to legal heirs is exempt from tax as it is not considered a payment to the employee.… Read More »
Salary Income Exempt from Tax Certain categories of salary income are fully or partially exempt from tax under specific conditions, often applicable to foreign citizens or special circumstances. Exempt Salary Categories Teachers from SAARC Member States Exemption applies under DTAA agreements for teachers, professors, or research scholars visiting another SAARC country for teaching or research.… Read More »
Calculation of Income from Salary Introduction Section 17 provides a comprehensive definition of salary, covering wages, pensions, gratuity, fees, bonuses, perquisites, and profits in lieu of salary. It also includes advance salary, leave encashment, provident fund contributions, and contributions to the Agniveer Corpus Fund. Key Inclusions in Salary Components: Wages, annuities, pensions, gratuity Any fees, commission,… Read More »
Income under the Head ‘Salary’ Introduction Income under the head ‘Salary’ is computed on a due or receipt basis, whichever is earlier. It includes taxable allowances, perquisites, retirement benefits, and profits in lieu of salary, with permissible deductions. Tax Deduction at Source (TDS) TDS Deduction (Section 192):Employers deduct tax at the time of payment, based… Read More »
SBI For outward remittance from NRO account SBI For outward remittance from NRO account Based on the document provided, here are the key points regarding the SBI Request for Outward Remittance from NRO account (Form NRI-11.2): Purpose and Mechanism Transaction Type: This form is used to request a debit from an NRO savings or… Read More »