I am a Scientist based in Lucknow. I received an award from the Dept. of Science and Technology. As part of this award, I get a fellowship of INR15,000.00/per month. How can I claim exemption for (15,000x12=180,000) it in ITR1 form under Sec 10 (17A). I do not see any place where I can mention the amount for the last year as exempt. Kindly advise

Ans: As per section 195 of IT Act, Interest earned on Non Resident External (NRE) accounts and Foreign Currency Non Resident (FCNR) accounts are tax free in India. Hence, there would be no TDS. Please check with your bank and ask the reason for deduction. It is possible that you have an NRO deposit and hence the tax deduction.

Ans: If you select online mode of filing ITR, under option "Gross Total Income" you will find schedule of exempt income.

Ans: In pursuance to the proposal in the Budget Speech, 2023, by the hon’ble 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 w.e.f. 01.04.2023.

There is no change for gov empleoyee. While in the case of Central/State Government employees, the entire leave encashment is exempt from tax

Ans: When filing your Income Tax Return (ITR-1) after retirement, you'll need to account for your income from Provident Fund (PF) and Gratuity. Here's how you can handle these components:

Provident Fund (PF):

• PF withdrawals are taxable if you have not completed five years of continuous service. However, if you've been employed for five years or more, PF withdrawals are tax-exempt.
• If your PF withdrawal is taxable, you should report it under the head ‘Income from Other Sources’ in your ITR-1 form.
• If your PF withdrawal is tax-exempt (due to more than five years of continuous service), you don't need to report it in your ITR as taxable income.

Gratuity:

• Gratuity received by an employee on retirement is exempt from tax up to a certain limit as per the Income Tax Act.
• The exemption for gratuity is calculated based on the formula: (15/26) * (last drawn salary) * (number of years of service).
• The maximum exemption limit for gratuity is Rs 20 lakh, as per the latest tax laws.
• If the gratuity amount you received is within the exemption limit, you don't need to report it in your ITR as taxable income.
• However, if the gratuity amount exceeds the exemption limit, the excess amount is taxable and should be reported under the head ‘Income from Salaries’ in your ITR-1 form.

Here's how you can report these incomes in your ITR-1 form:

• If both your PF withdrawal and gratuity fall within the exemption limits, you don't need to report them in your ITR-1 form.
• If any part of your PF withdrawal is taxable, report the taxable portion under ‘Income from Other Sources.’
• If any part of your gratuity is taxable (i.e., exceeds the exemption limit), report the taxable portion under ‘Income from Salaries.’

Remember to keep all relevant documents, such as Form 16, PF withdrawal statement, and gratuity payment details, handy while filing your ITR. If you're unsure about any specific details or calculations, consider consulting a tax advisor or chartered accountant for personalised guidance.