Is Leave Encashment recieved from Foreign employer available under 10(10AA)

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An individual working in Germany as a local employee for four years received leave encashment upon resignation. They are now seeking to know if this amount is eligible for deduction under Section 10(10AA) of Indian income tax law. The consensus is that it is indeed eligible, and the amount should be reduced from the gross salary when filing the Income Tax Return (ITR).

Krishna

Krishna (Querist)

05 December 2021 Hi Team,

I was working for 4 year dedicatedly in Germany as a local employee there with no connection to India. 4 month back I resigned and Move back to India and started a job here.

Now since I use to get 25 leaves in a year, I was unable to finish 16 leaves and those were enchashed along with my salary. Can I claim deduction for that Leave Encashment under 10(10AA)? Also I have a proof as a salary slip for the same. Will that work if I need to upload it somewhere?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

05 December 2021 Yes, 10(10AA) exemption may be claimed.
Reduce the amount from gross salary and file ITR.

Krishna

Krishna (Querist)

05 December 2021 Do I need to provide any kind of Proof somewhere since it's a foreign employer they don't have Form 16? Definitely I do have a Pay slip where I can show it's a leave enchashment money?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

05 December 2021 No need to provide any proof unless asked for it.

Krishna

Krishna (Querist)

05 December 2021 Thanks a lot for the clarification

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