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Leave Encashment at the Time of Retirement of an employee of a Co Operative Bank

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JAYAKUMAR.M.G

PARTNER

328 Points Posted on 10 June 2021

Hi Experts

Kindly advice whether an Employee of a Primary Agricultural Credit Society in Kerala eligible for claiming Exemption of leave encasement at the time of retirement Rs 5.00,000( Five Lakhs) applicable for Government employees in view of the fact that they are following Kerala Service Rules applicable to State Government employees

Replies (4)

Quick Summary

This discussion clarifies the tax exemption for leave encashment upon retirement for employees of Primary Agricultural Credit Societies (PACS) in Kerala. While these employees follow Kerala Service Rules, they are not considered government employees. Therefore, the exemption limit for leave encashment is Rs. 3 lakhs, as applicable to non-government employees under Section 10(10AA)(ii) of the Income Tax Act.

CMA Poornima Madhava

CMA

13117 Points Posted on 10 June 2021

I think employees of PACS are not treated as govt employees. Hence, leave encashment (at the time of retirement) of up to Rs.3 lacs can be claimed as exemption u/s 10(10AA)(ii) as applicable to non-govt employees.