Leave Encashment after resignation

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If you receive leave encashment from a previous employer after resigning to join a new company, its taxability depends on specific rules. Under Section 10(10AA), leave encashment received at the time of retirement or resignation is partially exempt from tax for non-government employees. This exemption applies regardless of whether you are under the old or new tax regime.

Mahabir Prasad Agarwal

Mahabir Prasad Agarwal (Querist)

26 July 2025 If a employee receives Leave Encashment from previous employer after resignation to join another employer. What is the taxability rule of the same under old and new tax regime sir ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

27 July 2025 Leave encashment received at the time of retirement or resignation (as opposed to during service) is eligible for exemption under Section 10(10AA). For non-government employees, the leave encashment received at the time of resignation or retirement is partially exempt from tax. The exemption for leave encashment under Section 10(10AA) is available under both the Old Tax Regime and the New Tax Regime.

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Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

25 September 2025 Good luck...

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