Leave encashment exemption for private sectors employees

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This discussion clarifies the tax exemption for leave encashment received by private sector employees, particularly in cases of company mergers. It confirms that the exemption, as per Section 10(10AA)(ii) of the Income Tax Act, applies to non-government employees and is capped at Rs 25 lakhs. This exemption is available even if the leave was credited before the merger.

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(Querist)
04 July 2024 Will employees of merged company get leave encashment exemption received from merged company.
Is Leave encashment amount taxable which is received from pending leaves which were credited to the employees on last salary pre merger.
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CA R SEETHARAMAN

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CA R SEETHARAMAN (Expert)
05 July 2024 It will be considered as leave encashment on retirement/ resignation and exempt from tax upto Rs 25 lacs.
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CA Puja Sharma

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CA Puja Sharma (Expert)
05 July 2024 Yes, tax exemption upto Rs. 25 Lacs us 10(10AA)(ii) will be available in case of non-government employees.
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