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Exemption inconsistency due to Reversal of Allowance

Former Member
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Dear Experts,

We have paid Allowance (Rs 1,50,000) through IT0015 and respective exemption(50,000) maintained in IT0582 in March'13.

In next month i.e. in Aug'13 employee was discharged, so the allowance paid in March needs to be reverted.

To do recovery:

1) -ve entry of Allowance in IT0015 was made in Aug

which gives following result:

Allowance gets reverted i.e. -1,50,000.00 but exemption u/s 10 comes as -1,50,000.00. (Expected exemption is -50,000.00)

2) if -ve entry of allowance made in IT0014 for 01.03.2013 to 31.03.2013 (i.e. for March'13)

then Allowance get recovered as -1,50,000.00 and exemption entry comes as -50,000.00 but tat is not getting considered in total taxable income calculation.

Please suggest how to do recovery so that allowance and exemption should get reverted.

Regards,

Jayesh

Accepted Solutions (1)

Accepted Solutions (1)

Former Member
0 Kudos

Hi Jayesh,

Your second scenario is right, how you will give back exemption for last fy which is already closed, tell employee to apply for Tax returns &  you can able to recover allowance but not exemption.

Former Member
0 Kudos

Dear Kedar,

Employee got allowance of 1.5L and exemption of 50K so he paid tax on 1L in March.

Now if only allowance 1.5L is reverted then his income for this FY is reduced by 1.5L, so he will get Tax benefit on 1.5L, but he had paid tax on 1L only(in March),

so there is plane profit of tax due to exemption of 50K to employee in Mar'13.

Regards,

Jayesh

Former Member
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Hi Jayesh,

You want to deduct Tax for the same now for last FY ?

Former Member
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Dear Kedhar,

No, as he paid tax on 1L only in last FY(1.5L allow- 50K exemp), so he should get tax benefit of 1L in this FY year (as full 1.5L allow is reverted).

But he was getting benefit on 1.5L.

Thanks and Regards,

Jayesh

Former Member
0 Kudos

Hi Jayesh,

Maintain 1l as exemption in it0582 for this FY for getting exemption & recover 1.5l through it0015 wt of allowance then you will get -50000 as per your First scenario & if it is not giving expected result then recover from any other wage type.

Try this & let me know.

Former Member
0 Kudos

Hi Kedhar,

After maintaining -ve entry of 1.5l in IT0015 and 1L IT0580, result remains same.

When I go thru INCTX, exemption will be made as minimum of three: (Allowance, Exemptions claimed and entry in V_T7INT9), so in this case values are (-1.5L, +1L, -), so -1.5L considered for exemption.

Regards,

Jayesh

Answers (0)