Leave encashment exemption to Govt. vs. Non-Govt. employees

Hello,

I want to know that govt employees get their leave encashment amount using their last salary, and this encashment is fully exempt from income tax. But non-govt employees get the amount using their average salary of last ten months.
Other things like a maximum of 300 leave days are the same then, what is the reason for the above difference?

Thanks

Replies (4)
Quick Summary
This discussion explores the disparity in how leave encashment is calculated and taxed for government versus non-government employees. While government employees receive their leave encashment based on their last salary and enjoy full tax exemption, non-government employees are paid based on the average of their last ten months' salary. The conversation also touches upon the ₹3 lakh exemption limit, which applies to non-government employees but not to government employees.

The cap of not more than 3 lakhs exemption...

Sir, I asked about the difference between 'last salary' vs 'average salary'.

And that one also (3 lac). This limit is not for Govt. employees.

Yes, the cap and the average of 10 months etc. all these are for non governmental employees.

For Govt. employees the LTA at the time of retirement is totally exempt, u/s. 10(10AA)(i) of IT act.

Agree with above comment

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