LEAVE SALARY TAXABILITY

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This discussion clarifies the taxability of leave encashment for government employees upon retirement. Specifically, it addresses a Tamil Nadu state government retiree who received ₹347,500 for unearned leave. According to Section 10(10AA) of the Income Tax Act, 1961, leave encashment received by government employees at retirement is fully exempt from tax.

P.Madhivadhanan

P.Madhivadhanan (Querist)
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23 January 2020 AN ASSESSEE WHO WAS RETIRED FROM TAMILNADU STATE GOVT SERVICE RECEIVED 347500 AS ENCASHMENT OF UNEARNED LEAVE ON PRIVATE AFFAIRS AT THE TIME OF RETIREMENT. IS IT TAXABLE OR EXEMPT U/S 10(10AA)

Spurto Consultancy Services

Spurto Consultancy Services (Expert)
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23 January 2020 As per Section 10(10AA) of the Income Tax Act, 1961, Leave encashment received at the time of retirement for a Government(Central as well as State) employee is fully exempt in the hands of the recipient.