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Leave Encashment - section 10(10AA)
Whether leave encashment of employee is fully taxable on termination of employee or exempted upto 3 lacs.
Replies (3)
Quick Summary
(a) Government employees: Leave salary received at the time of retirement is fully exempt from tax.
(b) Non-government employees: Leave salary received at the time of retirement is exempt from tax to the extent of least of the following:
(i) ` 3,00,000
(ii) Leave salary actually received
(iii) 10 months’ salary (on the basis of average salary of last 10 months)
(iv) Cash equivalent of leave (based on last 10 months’ average salary immediately preceding the date of retirement) to the credit of the employee at the time of retirement or death. Earned leave entitlement cannot exceed 30 days for every year.
Notes:Leave salary received during the period of service is fully taxable.
(b) Non-government employees: Leave salary received at the time of retirement is exempt from tax to the extent of least of the following:
(i) ` 3,00,000
(ii) Leave salary actually received
(iii) 10 months’ salary (on the basis of average salary of last 10 months)
(iv) Cash equivalent of leave (based on last 10 months’ average salary immediately preceding the date of retirement) to the credit of the employee at the time of retirement or death. Earned leave entitlement cannot exceed 30 days for every year.
Notes:Leave salary received during the period of service is fully taxable.
Whether retirement clause is applicable for termination also??
Yes, applicable for termination also..
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