Leave encashment

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Krishna Murty

Krishna Murty (Querist)
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23 January 2013 Sir

Kindly tell me how to calculate tax liability, if the leave encashment is received in every year.

Guest

Guest (Expert)

23 January 2013 The unutilised leave is encashed and is known as leave salary.
Its calculation is as follows:

Least of following will be exempted.

1. Leave encashment Actually received.

2. Last 10 Month average salary .(average salary will consist of Basic pay + DA + Turnover Commission)

3.Maximum amount fixed by the Government from time to time (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.

Anand

Anand (Expert)
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24 January 2013 I do not agree with Expert Disha.
The author has mentioned that leave encashment is received every year. I assume this means that the leave encashment is not being received at the time of retirement. The exemption dealt with u/s 10(10AA) is available only for leave encashment at the time of retirement or service termination.
If leave encashment is received every year then it is taxable as if it is a normal salary.

Krishna Murty

Krishna Murty (Querist)
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24 January 2013 Sir
I was satisfied with Mr.Anand's reply. What I am asking that leave encashment is not received at the time of retirement or termination.It is received in every year.

Thank you Mr.Anand

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Guest

Guest (Expert)

24 January 2013 Thanks a lot for correcting me Anand Sir.

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