Income tax
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
11 August 2011
plz explain the concept of leave encashment and its practical applications and what points are to be kept in mind.
CMA. Murali
(Expert)
11 August 2011
Leave Encashment received during the course of service is fully taxable for Govt and Non-Govt Employee.
Leave Encashment received at the time of retirement is fully exempt for Govt Employee as per sec 10(10aa)(i).
Leave Encashment received at the time of retirement is partly exempt for Non-Govt Employee as per sec 10(10aa)(ii).
Encashment of earned leave on retirement would however, be exempt to the extent of least of:
i. 10 months salary calculated on the basis of last 10 months average salary or
ii. Rs. 3,00,000
iii. Amount equivalent to earned leave
iv. Actual amount paid by the employer
Entitlement to earned leave not to exceed 30 days for every year of actual service.
Limits provided for aggregate maximum from any number of employers.
Encashment of earned leave on retirement would be wholly exempt for employees of Central/State Government.
Leave Encashment received at the time of retirement is fully exempt for Govt Employee as per sec 10(10aa)(i).
Leave Encashment received at the time of retirement is partly exempt for Non-Govt Employee as per sec 10(10aa)(ii).
Encashment of earned leave on retirement would however, be exempt to the extent of least of:
i. 10 months salary calculated on the basis of last 10 months average salary or
ii. Rs. 3,00,000
iii. Amount equivalent to earned leave
iv. Actual amount paid by the employer
Entitlement to earned leave not to exceed 30 days for every year of actual service.
Limits provided for aggregate maximum from any number of employers.
Encashment of earned leave on retirement would be wholly exempt for employees of Central/State Government.
13 August 2011
I agree with the expert
CA. Krishna K Neeraj
(Expert)
15 August 2011
Agree with Murali
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