What is the general leave policy in India? How many days Earned Leave (EL), Casual Leave (CL) and Sick Leave is one entitled to per year? These questions are often asked by employees/workers working in any organisation or office. Leave is different from holidays and days-off, since it aims to fulfil different objectives of work life sphere. However, there is always a confusion how much leave can one avail, what is one legally entitled to, the consequence of the same on wages/salary etc.
Employment laws set the umbrella framework for deciding different dimensions of leave, like category or types, eligibility, duration etc. Many companies and organizations categorise leaves in different categories like casual leave, sick leave, earned leave, maternity leave, special leaves, loss of pay leave, compensatory leave etc.
In case of employment contacts, where trade unions are involved in deciding employment contacts, leave rules are formulated in consultation with the unions. Such elaborate consultation is specified in The Industrial Employment Standing Orders Act which is formed for enforcement of different conditions of services.
In India, three types of leaves are generally followed namely earned leave, sick leave and casual leave. Different provisions exist under different laws, for different categories of leaves.
Details of each category are elaborated hereunder. While the Act specifies the broad framework, the notified rules under each legislation detail the implementation or applicability of these leave policies.
This leave is usually granted to a concerned employee by reason of presence of an infectious disease in the family or household of the employee, if such disease is considered to be hazardous to the health of other people.
Working Journalist and Other News Paper Employee’s (Conditions of Service) and Miscellaneous Provisions Act, 1955 – Rule 3028
Maximum 30 days of quarantine leave can be availed by the employees covered under this Act.
Sales Promotion Employees (Conditions of Service) Act, 1976 – Rule 1629
An employee covered under this Act can avail maximum 30 days of quarantine leave on recommendations by authorized Medical Attendant or Public Health Officer.
Working Journalist and Other News Paper Employee’s (Conditions of Service) and Miscellaneous Provisions Act, 1955
Extraordinary leave without wages may be granted to employees covered under this Act, by the newspaper establishment in which he is employed.
Sales Promotion Employees (Conditions of Service) Act, 1976
A sales promotion employee may be granted extraordinary leave without wages at the discretion of the employer in special circumstances.
Apprentices Act, 1961 – Section 1531
An apprentice can avail extraordinary leave upto a maximum period of 10 days in a year.
Study Leave/Sabbatical Leave
Study leave/sabbatical leave is granted to an employee to pursue higher studies with a guarantee to resume them in job on completion of the leave. Such leaves are granted to an employee in accordance with company policies and may be paid or unpaid sabbatical leave. The sabbatical leave would be exclusively for scientific or academic work at any relevant institution in India or abroad. The facility of sabbatical leave may be extended to include work on other activities of the innovation chain with industry, consultancy organizations, financial institutions, project engineering firms, technology marketing/transfer agencies, etc.
Working Journalist and Other News Paper Employee’s (Conditions of Service) and Miscellaneous Provisions Act, 1955
The Rule provides for grant of study leave with or without wages at discretion of the employer.
Sales Promotion Employees (Conditions of Service) Act, 1976
Any employee covered under the Act may be granted study leave with or without wages in accordance with the company policies.
Leave Not Due
Where an employee has no leave to his credit and he/she still requires leave, such leave may be granted at the discretion of the employer.
Working Journalist and Other News Paper Employee’s (Conditions of Service) and Miscellaneous Provisions Act, 1955 – Rule 3233
A working journalist who has no leave to his credit may be granted leave at the discretion of the newspaper establishment in which such working journalist is employed.
Sales Promotion Employees (Conditions of Service) Act, 1976
A sales promotion employee, who has no leave to his credit, may be granted leave not due at the discretion of the employer.
Leave For General/Bye Election For Parliament And State Assemblies34
During the general elections in the country or the state where the employee is residing he is eligible for leave on the polling day. For general elections of Lok Sabha and Vidhan Sabha or any of the bye election one day leave is been declared to all employees for the polling day. (Sec.3A of Karnataka Industrial Establishments (National and Festival Holidays) Act, 1963)35
Under Industries Association Act, 1963 Section 3 (A) also there is a provision for such leave.
For Central Government employees provision for such leave differs for each election details of which can be checked as under given table36 :
|II. Bye-Elections –
(i) Lok Sabha
|II. (a) Holiday/Closure of offices State Government normally declares a local holiday in that particular area/constituency on the polling day (s) if the election is held on day (s) other than Sunday/or other closed holidays. Central Government offices may also follow the State practice in such cases.
(b) Grant of Special Casual Leave-
|(ii) State Assemblies||(a) Holiday/closure of offices- In bye-election to State Assemblies, Central Government offices should not be closed. It would be sufficient if only those Central Government employees who may be placed on election duty are permitted to absent themselves from office on the polling day (s). All other employees should be given facility to excise their franchise either by way of coming late to office or by being allowed to leave office early or a short absence on that day, subject to the exigencies of the services.
(b) Grant of Special Casual Leave- Permissible on the grounds/circumstances as in the case of general elections. (of I(b) above.)
|III.Panchayat/Corporation. /Municipalities or other- local bodies||III. The Central Government-offices shall not be closed. The Government employees who are bonfire voters and desire to exercise their franchise should however, offered reasonable facility, subject to the normal exigencies of service, either by way of coming late to office or by being allowed to leave office early or a short absence on that day.|
Human Resource department of every company deals with employees and to maintain a healthy and friendly relation with them. They work as a bridge between employees and management. As the competition in the labour market is high to find and retain skilled employees HR department of various companies other than the legal leaves also are coming up with various innovative leaves. Some of the examples of these leaves adopted by different companies to provide benefit to their employees are as follows:
This leave is a grant paid time off from work to employees for the death of a relative. Employees are eligible for up to 7 days leave, if necessary, in the event of the death of an immediate family member (defined as parents, grandparents, siblings, spouse, children and in-laws). This leave is generally provided for the demise of close relative, and depends on the policies framed by the organisation. This leave is not legally entitled but is an innovative approach of HR policies in some of the private firms.
In Bharti Airtel company a half day leave is been provided to the employee for the celebration of Birthday.
Employee Volunteering Leave39
Employee volunteering leave is a leave been granted to an employee to participate in volunteer for a charity. Bharti Airtel Company provides one day paid leave to its employee for volunteering work.
Overtime is the amount of time someone works beyond normal working hours; these may be determined or mentioned under various Acts which are applicable for the functioning of that organization. Below given are Acts that have different provisions for overtime payment and their contravention.
Minimum Wages Act, 1948
• Sec. 14 of the Act mentions that any worker whose minimum rate of wages are fixed with wage period of time, such as by hour, by the day or by any such period and if a worker works more than that number of hours, it is considered to be overtime. In case if the number of hours constituting a normal working day exceeds the given limit, then the employer will have to pay him for every hour or for part of an hour for which he has worked in excess at the overtime rate.
• As per the Act it is compulsory to maintain registers and records as Register of Overtime –Form IV. This Register of Overtime contains various details such as name of employee, hours of overtime, date and other such details which are necessary for the records.
• Contravention of any provisions pertaining to fixing hours for normal working day etc., will be punishable with imprisonment upto 6 months or with fine upto Rs.500.
Factories Act, 1948
• Under Sec. 51, 54 to 56 & 59 of the Act details are mentioned regarding the working hours, spread over and overtime.
• Under Sec. 59 it is mentioned that where a worker works in a factory for more than 9 hours in any day or for more than 48 hours in any week, he/she shall, in respect of overtime work, be entitled to receive wages at the rate of twice his/her ordinary rate of wages.
• If in any factory there is any contravention of any of the provisions of this Act or of any rules made there under or of any order in writing given there under, the occupier and manager of the factory shall each be guilty of an offence. If found guilty, they will be punishable with imprisonment for a term which may extend to 2 years or with fine which may extend to one lakh rupees or with both. Even then if the contravention is continued after conviction, then will be punishable with a further fine which may extend to one thousand rupees for each day on which the contravention is so continued.
Mines Act, 1952 • Under Sec. 28 to 30 of the Act it is mentioned that no person employed in a mine shall be required or allowed to work in the mine for more than 10 hours in any day inclusive of overtime.
• Under Sec. 33 it is mentioned that for overtime wages are to be paid at the rate of twice the ordinary rates of wages of the worker.
Bidi and Cigar Workers (Conditions of Employment) Act, 1966
• Under Sec. 17 & 18 of the Act relating to working hours, it is mentioned that the period of work including over time work should not exceed 10 hours in a day and 54 hours in a week.
• Under Sec. 33 if any person who contravenes any of the provisions of this Act or of any rule made there under, then for the first offence will be punishable with fine which may extend to two hundred and fifty rupees (Rs 250). In case of a second or any subsequent offence the penalty would be imprisonment for a term which shall not be less than one month or more than six months or with fine which shall not be less than one hundred rupees or more than five hundred rupees or with both.
Contract Labour (Regulation & Abolition) Act, 1970
• As per Rule 79 of the Act, it is compulsory for every contractor to maintain a Register of Overtime in Form XXIII which will contain all details relating to overtime calculation, hours of extra work, name of employee, etc.
Building and Other Construction Workers (Regulation of Employment Service) Act, 1996
• Under Section 28 & 29 of the Act, it is mentioned that worker who is working overtime will be paid Overtime wages at the rate of twice the ordinary rate of wages.
• If any person contravenes any other provision of this Act or any rules made there under or who fails to comply with any provision of this Act or any rules thereunder shall (if there is no express penalty elsewhere provided for such contravention or failure), be punishable with fine which may extend to one thousand rupees for every such contravention or failure, as the case may be. Incase of a continuing contravention or failure, as the case may be, there would be an additional fine which may extend to one hundred rupees for every day during which such contravention or failure continues after the conviction for the first such contravention or failure.
Working Journalist (Conditions of Service) and Miscellaneous Provisions Act, 1955
• As per Rule 10 of the Act, it is mentioned that a working journalist who works for more than 6 hours on any day in day shift and more than 5½ hours in night shift shall be compensated with rest hours equal to hours for which he/she has worked overtime.
• If any employer contravenes any of the provisions of this Act or any rule or order made there under, he shall be punishable with fine which may extend to two hundred rupees. And whoever has been convicted of any offence under this Act, is again convicted of an offence involving the contravention of the same provision shall be punishable with fine which may extend to five hundred rupees.
Plantation Labour Act, 1951
• As per section 19 of the Act where an adult worker works in any plantation on any day in excess of the number of hours constituting a normal working day or for more than 48 hours in any week, he/she shall, in respect of such overtime work, be entitled to twice the rates of ordinary wages. Provided that no such worker shall be allowed to work for more than 9 hours on any day and more than 54 hours in any week.
• If any person contravenes any of the provisions of this Act shall be punishable with imprisonment for a term, which may extend to three months, or fine, which may extend to five hundred rupees, or with both.
April 8, 2008 by Raag Vamdatt ·
Financial Year (FY), Assessment Year (AY) and Previous Year (PY) are terms very commonly heard during the Income Tax (IT) returns filing season. This article defines these terms, and explains the difference between them.
It’s that time of the year again – the time when the financial year comes to an end, and we all scramble to collect our income and investment details to prepare for the most hated event of the year – filing our income tax (IT) returns!
(Wondering why a Financial Year is from April to March, and not from January to December? Please read “Why does the financial / fiscal year start from 1st April?“).
And when we start filling out the tax return form, one of the first things that we encounter is the field Assessment Year (AY). And next in line is Previous Year (PY). So, what is an Assessment Year? What is a Previous Year? And, how are these different from a Financial Year (FY)?
It’s time to understand this better!
(Ready to file your income tax return, but confused which form to use? Please read “Income Tax (IT) Return Filing – Which ITR form to use?“)
Unit of Time for Measuring Income, Expenses and Investments
The government charges income tax on the income we earn. From this income, it also allows us to deduct some expenses we incur, and some investments that we make.
But for measuring the income, expenses and investments, we need a unit of time. This unit has been defined world over as 1 year. Thus, almost everywhere in the world, companies and people report their incomes, expenses, investments and other relevant information on a yearly basis.
Financial Year (FY)
The financial information is reported on a yearly basis, and the year for which this information is reported is called aFinancial Year, or FY in short.
The actual start and end of a financial year varies from country to country.
For example, the financial year in India starts on 1st April every year, and ends on 31st March of the following year. Thus, the last financial year in India (for which companies would soon start reporting their incomes) started on 1st April 2007, and ended on 31st March 2008. This is usually denoted as FY 07-08, or FY 08.
In USA, the financial year coincides with the Calendar Year (January to December). Thus, it starts on 1st January every year, and ends on 31st December of the same year. The current financial year in USA started on 1st January 2008, and would end on 31st December 2008. This is usually denoted as FY 08.
The term Financial Year, or FY, is used universally. That is, it is used not just in the context of income tax, but also for all other accounting and reporting.
Assessment Year (AY)
Income from a particular financial year is assessed for income tax in the following year. The financial year in which this assessment takes place is called the Assessment Year (AY).
Thus, for the current tax season, we would be filing the income tax returns for the Financial Year 07-08 (or FY 07-08), and since it would be assessed in the year 2008-2009, the Assessment Year is 08-09 (or, AY 08-09).
The term “Assessment Year” is normally used specifically for Income Tax (IT).
Previous Year (PY)
Now after reading about FY and AY, this should be simple!
In an assessment year, the income from the year preceding it is assessed for income tax. This year is called the Previous Year, or PY in short. So, simply speaking, Previous Year is the financial year for which your income is being assessed. Now that’s simple, isn’t it?
Let’s continue with our example: For the current tax season, we would be filing the income tax returns for the Financial Year 07-08 (or FY 07-08), and therefore, it is also the Previous Year (PY 07-08). Since this income would be assessed in the year 2008-2009, the Assessment Year is 08-09 (or, AY 08-09).
Again, the term “Previous Year” is also normally used specifically for Income Tax (IT).
Now that we understand the terms Financial Year (FY), Assessment Year (AY) and Previous Year (PY) better, I have only one thing to say:
Income tax treatment of leave travel allowance / concession (LTA / LTC)
Most salaried people get a special allowance for taking vacations, called Leave Travel Allowance (It is also known as Leave Travel Concession or Leave Travel Assistance).
This LTA / LTC has income tax benefits associated with it, provided you meet certain conditions. Let’s understand the income tax treatment of LTA / LTC better.
What is Leave Travel Allowance / Leave Travel Concession (LTA / LTC)?
This is a special allowance that most salaried people get. This allowance is meant for traveling – you are expected to utilize it to spend it for tourism-related travel expenses.
It can be given out every year, or once every 2 or 4 years. Many organizations also allow you to accumulate this allowance for 2 years.
Income tax and LTA / LTC
The LTA / LTC that you get is fully exempt from income tax, provided it satisfies certain conditions. Here are the conditions:
The amount is actually spent on travel
You have to actually spend this amount on transportation. The spending can be for you and your family members, but you have to be one of the travelers.
Here, family means spouse and children (including adopted children and stepchildren). Parents, brothers and sisters are also included if they are dependent on you.
It has to be for transportation
The amount has to be spent on transportation – either air, rail or road.
Any amount spent for lodging and boarding is not considered. Thus, food related expenses and hotel expenses are not exempt from income tax.
Also, this exemption is for primary travel between your city of stay and your destination. Other travel expenses like taxi / cab fare, auto fare, etc. can not be claimed as exempt.
Travel within India
The travel has to be within India – foreign travel is not considered. The government wants to boost tourism within India, not international travel!
Shortest Distance and Cap on claim amount
The amount exempt would be the amount required for travel to your destination by the shortest route, depending on the mode of your travel.
If you travel by air, the maximum amount that can be claimed as exempt is the economy class air fare to your destination by the shortest route.
If you travel by rail (or road), the maximum amount that can be claimed as exempt is the air conditioned first class (AC I Class) rail fare to your destination by the shortest route.
(Please see the example at the end of the article to understand this better)
Proof of travel
Proof of travel needs to be preserved and presented to claim this exemption. The tickets are considered valid proof.
If you arrange travel through a hired or rental car, the receipt from the travel agency or car rental agency is considered valid proof. Please note that any non-transport component (like driver allowance) is not considered for income tax exemption.
LTA / LTC and Block of 4 years
Apart form the above conditions, there is one more condition that causes confusion: The LTA / LTC tax exemption can be claimed only twice in a block of 4 years.
These blocks of 4 years are predefined by the government. These are:
2002 – 2005
2006 – 2009
2010 – 2013
And so on. The current block is 2014 – 2017.
Please note that these years are calendar years, and not financial years.
(Confused by terms like financial year and assessment year? Please read “https://hrmexpress.wordpress.com/2014/03/23/income-tax-it-jargon-financial-year-fy-assessment-year-ay-and-previous-year-py/”
to know these terms better)
Let’s understand the concept of “twice in a block of four years” through an example.
If you claim LTA exemption in 2006, then, you can claim it only once more till 2009. Thus, if you claim it again in 2007, you can not claim it before 2010, as you would have already claimed it twice in the block 2006 – 2009.
However, if you do not claim LTA exemption in 2006 and 2007, you can claim it for both 2008 and 2009, and also for 2010 and 2011, as 2010 and 2011 fall under the next block of 4 years: 2010 – 2013. Thus, it is possible to claim LTA / LTC exemption for 4 years in a row!
Carry forward of LTA / LTC Benefits
What if you can not claim LTA / LTC exemption for some reason?
No need to worry. The exemption doesn’t lapse – it can be carried forward to the next block of 4 years.
The only condition in this case is that the exemption has to be availed in the very first year of this subsequent block.
Thus, in this next block, you can claim a total of 3 exemptions!
Spouses and LTA
A question that is very commonly asked is: If both husband and wife are eligible for LTA, can both of them claim it?
Yes, they can very much claim LTA individually. The rules of LTA apply individually to each, which means that each spouse can claim LTA twice in a block of four years.
Thus, a family can claim LTA exemption four times in a block of four years if both spouses are eligible for LTA.
The only restriction is that both spouses can not claim LTA exemption for the same journey.
There is no other restriction: The LTA exemption can be claimed for the same family members, or different family members as allowed by the rules (as explained above). The family can in fact also travel twice in the same year, and each spouse can claim exemption for one journey.
(Note: The rules regarding claims by spouses might be slightly different in case of government employees. Please check with your organization / department to know the exact rules applicable if you are a government employee and claim LTC / LTA)
Let’s say you and your spouse are traveling to Bangalore from Mumbai. But instead of going from Mumbai to Bangalore, you go from Mumbai to Hyderabad, and then got to Bangalore. You travel by train in the AC 3 tier category.
The cost of AC 3 tier train tickets are as follows:
Mumbai – Hyderabad: Rs. 800
Hyderabad – Bangalore: Rs. 700
Bangalore – Hyderabad: Rs. 700
Hyderabad – Mumbai: Rs. 800
Thus, you spend a total of Rs. 6,000 for two people.
Now, the shortest route to your destination in this case would be Mumbai to Bangalore. The AC First class ticket costs Rs. 2,350 for this. So, your round trip fare would have been Rs. 9,400 for two people.
The amount exempt from income tax is the lesser of these two. Thus, in this example, even when you haven’t traveled through the shortest route, you can claim income tax exemption for the full amount of Rs. 6,000.
And what about the actual allowance that you get?
Let’s say you get a leave travel allowance of Rs. 10,000. Would it be fully exempt?
No. As we saw, the amount exempt is the lesser of the amount actually spent and the fare by the defined class through the shortest distance.
Thus, the amount exempt from income tax would be Rs. 6,000. The remaining Rs. 4,000 would be taxable, and would be included in your income.