An employee works in a company at a salary of Rs. 60000/- a month. In the month of October he gets an increment and is paid a salary of Rs. 1,20,000/- per month In the month of January, the company proposes to pay him incentives based on his performance on monthly basis which amounts to Rs. 13500/- in January, Rs. 8302 in the month of February and Rs. 6500/- in the month of March. The company also has a policy that if an employee completes 5 years of employement in the organzation then he/she shall get a leave encashment of 90 days or a 90 days leave. He opts for taking leave encashment for 90 days. Now at the end of the year the company has to calculate the actual tax deductible on his salary. You are the finance executive of the company and are now required to identify the taxable income and all the heads under which the same is taxable. Please provide reasons for treating a component as taxable/non-taxable. Further advise if the employee should opt for New Regime or Old Regime assuming that he has tax saving of Rs, 1,50,000/- under 80C and Rs. 25,000/- under 80D