Leave encahsment on retirement limit
This query is : Resolved
16 April 2016
Leave Encashment amount of Rs. 338688 at the time of retirement.What is taxable amount?
CA R SEETHARAMAN
(Expert)
16 April 2016
Up to 3 lacs is exempted balance amount will be taxed.
Murtaza I Bhagat
(Expert)
16 April 2016
Encashment of leave salary at the time of retirement
Exemption from amount received as leave salary is available under Section 10(10AA). For the
purpose of availing exemption under section 10(10AA), the employees are divided into 2 types of
categories:-
1. Govt Employees (Central Govt and State Govt employees only): Leave encashment of
accumulated leave at the time of retirement, whether on superannuation or otherwise, received
by a Govt employee, is fully exempt from tax. No tax would be levied on any amount received
as leave encashment by govt employees on retirement.
2. Other Employees: Leave encashment of accumulated leave at the time of retirement whether
on superannuation or otherwise received by any other employee (except those covered above)
is exempt from tax to a certain limit. In such a case, the least of the following shall be exempted:-
1. Leave encashment actually received
2. 10 months “average salary”
3. Cash equivalent of unavailed leave calculated on the basis of maximum 30 days leave for every year of completed service.
4. Amount specified by the Govt i.e. Rs. 3,00,000
Exemption from amount received as leave salary is available under Section 10(10AA). For the
purpose of availing exemption under section 10(10AA), the employees are divided into 2 types of
categories:-
1. Govt Employees (Central Govt and State Govt employees only): Leave encashment of
accumulated leave at the time of retirement, whether on superannuation or otherwise, received
by a Govt employee, is fully exempt from tax. No tax would be levied on any amount received
as leave encashment by govt employees on retirement.
2. Other Employees: Leave encashment of accumulated leave at the time of retirement whether
on superannuation or otherwise received by any other employee (except those covered above)
is exempt from tax to a certain limit. In such a case, the least of the following shall be exempted:-
1. Leave encashment actually received
2. 10 months “average salary”
3. Cash equivalent of unavailed leave calculated on the basis of maximum 30 days leave for every year of completed service.
4. Amount specified by the Govt i.e. Rs. 3,00,000
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