Leencashment

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Bikas Mal

Bikas Mal (Querist)
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15 March 2015 Leave encashment are taxable when resign the company.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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16 March 2015 Leave encashment by government employee at the time of retirement or resignation from a job is is fully exempt from tax under section 10(10AA)(i).

For non- government employees can avail tax exemptions if leave encashment is done at the time of retirement or resignation from a job. The lowest amount from the following calculations will be exempted from tax under section 10(10AA)(ii):

# Period of earned leave in no. of months multiplied by average monthly salary. Maximum of 30 days of earned leave per year for completed years of service is taken into consideration.
# 10 times of average monthly salary.
# Rs 3,00,000/-
Or
#leave encashment actually received.

However, please note the below:

# If an employee receives leave encashment from more than one employer, the quantum of exemption will be computed independently in respect of each employer.
# The total amount of exemption should not exceed Rs.3,00,000/- during his lifetime.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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16 March 2015 http://taxguru.in/income-tax/tax-treatment-leave-encashment-salary.html

Also check out above link for more details.

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