leave encashment limit

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10 November 2010 What is new eave encashment limit?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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10 November 2010 Leave salary received by any employee during the period of service.

* Leave salary received by any employee during the period of service is fully Taxable.however relief under section 89 read with rule 21A can be claimed (Circular no 431 Dated September 12,1985)

(B)Leave Salary to At the time of Retirement /superannuation or otherwise.
(i) Leave salary to Central/State Government employee

* Leave salary given to Central/State Government employees at the time of retirement /superannuation in respect of period of earned leave at his credit ,is fully exempted.{section 10(10AA)(i)}

(ii)Leave salary given to other employee (non Central/State Government employee is exempted as per detail below.{section 10(10AA)(ii)}
Least of following will be exempted.

1. Leave encashment Actually received.
2. Last 10 Month average salary .(average salary explained below)
3. Maximum limit Rs 300000/-
4. Cash equivalent of salary in respect of the period of earned leave to the credit of the employee only at the time of retirement whether on superannuation or otherwise calculated maximum by 30 days maximum for every year of actual service rendered to employer from whose he has retired.