Tax deducted on leave encashment post resignation

2509 views 2 replies

Gaurav S

IT Professional

29 Points Posted on 30 June 2011

Hi,

In Nov 2010, I resigned from a private sector company after serving for 3.5 years and joined another one . My leave encashment amount was 67677 but the previous employer added it to the 'Gross Income' but did not provide me 'Leave Encashment Exemption' and hence I paid income tax on it. These figures are mentioned in the Full and Final Settlement Letter but are not mentioned on the Form 16 I received recently.

My question: Can I claim the income tax exemption on leave encashment while filing the IT returns now ? If yes, can I deduct the leave encashment amount from my 'Gross Income' and recalculate my tax liability ? Please provide useful details.

Thank you very much for your time and awaiting your valuable responses.

Gaurav

Replies (2)

valji

Accounts manager-MBA

2150 Points Posted on 30 June 2011

As per section 10(10AA) of income tax in india, leave encashment amount received by employee by a previous employer in full and final statement, is non-taxable. So If you have changed a job in financial year and received leave encashment for the remaining earned leaves (ELs) Just deduct the amount from total income and compute the income tax on top of that.