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Leave encashment of PSU employees at the time of retirement

Parveen Wadhwa (1 Points)

09 August 2019

whether leave encashment of bank employees at the time of retirement is fully exempted from income tax.

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3 Replies

Kapadia Pravin (17264 Points)
Replied 09 August 2019

Follow Form 16 alongwith 26AS

Siddharth Parmar (ipcc student) (61 Points)
Replied 09 August 2019

for government employees it is fully exempted

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Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 23 August 2020

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.