Taxability of leave encashment on resignation
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
22 February 2013
During mid 2012, I have resigned from a company after 25 years of service. During final settlement, I have received a sum of Rs.1.90 lacs as leave encashment (for 240 days) and the same was taxed by the employer.
Is it correct to tax the amount paid as leave encashment on resignation.
If not taxable, can I claim on filing of my IT return. If claimable, under what section of IT Act?
Is it correct to tax the amount paid as leave encashment on resignation.
If not taxable, can I claim on filing of my IT return. If claimable, under what section of IT Act?
Santosh Mishra
(Expert)
04 March 2013
For Leave encashment, least of following is exempted from tax:
1. Earned leave months x Average salary( Basic)( sec 10( 10AA))
2. Avg. monthly salary x 10
3. Maximum amount 3, 00,000
4. Actual amount received
Earned leave months would be (number of year of service*30) minus leave availed by you during your service.
Average monthly salary here means salary drawn by you in last 10 months immediately preceding the retirement.
Please calculate your exempted LE based on above method
1. Earned leave months x Average salary( Basic)( sec 10( 10AA))
2. Avg. monthly salary x 10
3. Maximum amount 3, 00,000
4. Actual amount received
Earned leave months would be (number of year of service*30) minus leave availed by you during your service.
Average monthly salary here means salary drawn by you in last 10 months immediately preceding the retirement.
Please calculate your exempted LE based on above method
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