15 July 2009 Mr. Jain,

Leave encashment is taxable.
Leave can be encash by the following way :
1). As on financial year closing.
2). As on full and final payment (When you left the job)
3). When you get retirement.

Whenever it accured or paid, it'll be treated as taxable.

CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)
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15 July 2009 Leave Encashment encashed other than at the time of retirement is fully taxable.

Leave Encashment received at the time of retirement is taxable subject to following deduction u/s 10(10AA).

1)300000/-
2)Leave Encashment received.
3)10 Month's average salary
4)Leave encashment taking 30 days a year standing to the credit of the employee.

Salary = Basic + DA + Commission.

Sumit Jain

Sumit Jain (Querist)
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17 July 2009 nitin i want to ask

how we calculate
4) Leave encashment taking 30 days a year standing to the credit of the employee.

plz help

CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)
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22 July 2009 Take the following example.
A Co. is allowing 45 days per year as a leave.
An Employee has worked for 23 years and availed 90 days during his employment.
So leave standing to his credit will be:

23*30=690-90=600 days i.e 20 months.

If you have further doubts, you can revert back to me.

Sumit Jain

Sumit Jain (Querist)
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06 August 2009 thanx nitin

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