Leave encashment

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sandeep

sandeep (Querist)
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10 September 2010 Dear Sir,

Leave encashment is taxable for Income and if yes then what is the criteria.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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10 September 2010 Leave Encashment

Leave encashment while in service is taxable. Encashment of sick leave is taxable.

Leave encashment received at the time of retirement is fully exempt in the case of Government Servants. [U/S 10(10AA)(i)] In the case of non-Govt. Employees,[U/S 10(10AA)(ii)] leave encashment is exempt to the extent of the least of the following four amounts: -

* Rs. 3,00,000/-
* Ten months' average salary;
* Cash equivalent of the leave due at the time of retirement;
* Leave encashment actually received at the time of retirement.

Here the average salary means the average of the salary drawn during the last ten months before retirement.

YOU CAN ALSO CHECK FOLLOWING LINK----

http://www.indiataxes.com/Information/incometax/contents/salaries/taxationofsalaries/sal_leave_sal.htm

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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10 September 2010 DEAR,
Leave encashment while in service is taxable. Encashment of sick leave is taxable.

Leave encashment received at the time of retirement is fully exempt in the case of Government Servants. In the case of non-Govt. Employees, leave encashment is exempt to the extent of the least of the following four amounts: -
• Rs. 3,00,000/-
• Ten months' average salary;
• Cash equivalent of the leave due at the time of retirement;
• Leave encashment actually received at the time of retirement.
Here the average salary means the average of the salary drawn during the last ten months before retirement.

FOR MORE INFO:- http://www.incometaxindia.gov.in/general/computation.asp

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