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

Manish (CA) (1079 Points)

25 November 2021  

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