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Problem in Leave Encashment Exemption !!!

venkat_polisetty
Active Contributor
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Hi Experts,

I have a doubt regarding Leave encashment exemption.

In my case, we are maintaining the leave encashment number in IT0416 and based on that system is calculating the leave encashment amount properly.

For Ex: Employee got terminated in 07.01.2016 and we have maintained data in IT0416 with 06.01.2016 based on that system is calculating the Leave encashment amount(50000/-) properly but in exemption system is showing 70000/- instead of 50000/-. this extra 20000 rupees we have encashed in June 2015, but employee got terminated on 07.01.2016 at that time we have encashed 50000 rupees only.

Kindly clarify on the same.

Thanking you ...

Regards,

Venkat Polisetty

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Answers (1)

Answers (1)

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Hi,

Are both of these wage types assigned to same tax code in v_t7int9 (i.e using SLEA)?

leave encashment during employment is fully taxable, so you may have to use different wage types for encashment during employment  & retirement.

regards

Bala.

venkat_polisetty
Active Contributor
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Hi Bala,

Thanks for the update.

Yes, we are using same wage type for Employement and Resignation/Retirement.

As per your suggestion, we are going to create new wage type for Retirement/Resignation for exemption.

Kindly let me know Is this correct process?

Regards,

Venkat Polisetty

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Hi Venkat,

We were using different wage type for encashment during service & retirement. As per the tax limit (3 Lakhs), exemption will be allowed for the wage type which is linked to v_t7int9.

You can also test it for any impact.

regards,

Bala.

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https://help.sap.com/saphelp_erp60_sp/helpdata/en/d3/3ae153038a424de10000000a174cb4/content.htm

Hi Venkat,

You can read the above link (title - process flow). It says the exemption given case by case.

It looks like, exemption have to be given up to the limit.

Let me also check with my experts.

regards,

Bala.

venkat_polisetty
Active Contributor
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Hi Bala,

Thanks for the update.

Regards,

Venkat Polisetty