my colleague is retired on 24.10.2018 from a nationalized bank and have received leave encashment of rs.587000 on superannuation.
Whether entire amount of leave encashment is exempted from income tax, please advise.
Dear Sir,
Leave encashment received at the time of either retirement or resignation is either fully or partially exempt depending upon the category that an employee falls under. This has been elaborated further below:
1) Leave encashment received by Central or State Government employee at the time of retirement or resignation is fully exempt
2) Leave encashment received by legal heirs of deceased employee is fully exempt
3) Leave encashment received by Non-Government employee is exempt based on the computation provided under Section 10(10AA)(ii) and balance amount if any is taxable as ‘income from salary’
Thanks & Regards
Bhaskar
Naveen Fintech Pvt Ltd
Kolkata
CA Inter
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