leave encashment

Section 10(10AA)(i)- LEAVE ENCASHMENT EXEMPTION

As per this section, the least of the following is exempt from tax:

1. INR 300,000; or
2. Actual leave encashment amount received; or
3. 10 months’ average salary; or
4. Cash equivalent of leaves that are lying credit to an employer’s credit, at the time of retirement.

Follow Form 16 alongwith annexure and check 26AS

Sir bankers leave encashment is taxable or not

Yes, taxable.

Sir
bankers leave encashment at time of retirement is taxable or not

Leave encashment is fully exempt only for employees of Central and State Government (If received after retirement or superannuation). For the purpose of income tax, PSU/nationalized bank is not considered as government employer. Accordingly, retired employees of public sector undertakings and nationalised banks cannot be treated as government employees. They are not entitled to get full tax exemption on leave encashment after retirement or superannuation under section 10(10AA). Exemption available to them up to limit and as per criteria prescribed for non-government employee.