‘Is my Rs 25L leave encashment tax-exempt?’

Do you have income tax-related queries?
Please ask your questions HERE and rediffGURU Mihir Tanna, associate director, S K Patodia and Associates, will answer them.

Rangarajan: I will complete 75 years on 7 July, 2024. If my income is only from salaries and bank interest, do I have to file return for FY 23-24?

The Income Tax Act, 1961, provides conditions for exempting senior citizens aged 75 years and above from filing income tax returns.

Conditions for exemption are:

  • The senior citizen should be of age 75 years or above.
  • The senior citizen should be a ‘resident’ of India in the previous year.
  • The senior citizen has pension income and interest income only and the interest income is accrued/earned from the same specified bank in which he is receiving his pension.
  • The senior citizen will submit a declaration to the specified bank.
  • The bank is a ‘specified bank’ as notified by the central government.
    Such banks will be responsible for the TDS deduction of senior citizens after considering the deductions under Chapter VI-A and rebate under 87A.
  • Once the specified bank, as mentioned above, deducts tax for senior citizens above 75 years of age, there will be no requirement to furnish income tax returns by senior citizens.

Vikas: Hi. I deposited my advance tax cheque of Rs 30,300 for FY 2022-23 using the tax challan on 14 June, 2022.
I received my income tax order for FY 2022-23 with a demand as the above mentioned payment is missing in their record.
On further investigation it was revealed that the bank made a mistake in filing this tax under wrong head; bank filed it under head 0023 which is for hotel receipts tax instead of 0021 which is for advance tax.
I have been following it up at my branch level but no resolution has been provided.
What is the way out?
Thanks, Vikas

You can submit a written application to jurisdiction assessing officer along with a copy of the challan and your communications with the bank.

If possible, take a declaration from the bank that they have made a mistake; you can submit the copy of the same along with application.


Anonymous: In the end of FY, my traded value in F&O option trading is Rs 80 lakh whereas my profit stands Rs 12 lakh. How will the income tax be calculated on this?
If I have to pay any other tax on my traded value other than my income tax that is calculated on my profit? Request is to answer.

Income from derivatives for the transaction done through recognised stock exchanges is non-speculative business income and taxable at slab rate.

Thus, in your case, Rs 12 lakh will be taxable.


Sarathy: I am a NRI and have few FDs in India.
The interest for the AS22-23 and the year AS 23-24 TDS was deducted.
For the year AS23-24, I have filed the ITR and got the refund what was deducted.
I haven’t filed for the AS22-23.
Is it possible to file the returns for AS22-23 and claim refund? If yes, how?

There is an option of filing a condonation application with the income tax department so that a belated ITR can be filed and refund can be claimed.

However, the application is accepted only if there is a genuine reason for not filing the ITR.


Anonymous: Sir, I am an ex-PSU employee & retired on 31st January, 2023.
I have received leave encashment payment on retirement in April 2023.
Am I eligible to claim tax exemption of Rs 25 lakh on leave salary while filing ITR for FY23-24?
Kindly advise.

In pursuance to the proposal in the Budget speech 2023 by the honourable FM, the central government has notified the increased limit for tax exemption on leave encashment on retirement or otherwise of non-government salaried employees to Rs 25 lakh with effect from April 1, 2023.

There is no change for government employees.

In the case of central/state government employees, the entire leave encashment is exempt from tax.

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Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.

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