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SECTION 10(10AA) applicable to PSU employee

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This query is : Resolved

Bimal (Querist)
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29 December 2020 Self retired in Nov'19 from a PSU. Got Rs 5,43 lakh as EL encashment and Rs 11.38 lakh as HPL encashment. Recently I came across a msg from CA I. M. Agrawal that CBDT has addressed the anomaly of exemption limit upto Rs 3 lakh and now the encashments are fully exempt without limit as was already applicable to CG employees..
Pl. guide whether now encashment is fully exempt and also whether it is only EL or EL+HPL?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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29 December 2020 Earned Leave encashment is fully exempt only for Direct employees of Central and State Government (If received after retirement or superannuation). ... For the purpose of income tax, PSU is not considered as government employer. Accordingly, you will get exemption only Upto 3 lacs(EL+HPL).

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