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Tax on Leave Encashment

(Guest)

If Leave encashment is taken during service. What will be the rule for computing of Tax on salary

Is leave encashment completely Taxable.

Please advice.

Rajesh

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5 Replies

CA Mani (Credit Analyst) (2809 Points)
Replied 02 August 2008

yes its complete taxable

M.Sriram Shenoy (CA Final) (814 Points)
Replied 02 August 2008

Leave encashment received while in service is FULLY TAXABLE.

If it is received at the time of retirement

incase of Govt Employees - it is FULLY EXEMPT

incase of Non-Govt Employees, then Such taxable amount is calculated by applying the following calculations:

Least of the following is deductible :

1. Actual Amount of Leave Encashment received.

2. Rs.300000 (Life time Limit)

3. Ten months average salary

4. Amount equivalent to earned leave to the credit of employee.

If leave salary is received at the time of retirement, then

if it is received by Govt. Employees - then it is FULLY EXEMPT

ANIL K SRIVASTAVA (C A) (47 Points)
Replied 02 August 2008

Leave enacashment availed while continuing in service is fully taxable.

Exemption from tax is available only when leave encashment is availed at the time of retirement on supperannuation or otherwise. Retirement includes resignation. However the conditions specified in the section are to be kept in mind.

A K Arivastava

(Guest)

Sir

pl guide me properly on the case given as under:

An employee terminated with a three months salary in lieu of notice period after a a continued service of seven year, having 7days earned leave at credit at the time of termination.

Q.1 Is he eligible to get gratuty ?

Q.2 Is he eligible for 7days leave encashement, the earned leave at his creidt.

Thanking you,

kailash dhingra

(Guest)

Originally posted by :maninder
"	yes its complete taxable	"

At superannuation or retirematnt rate of income tax showing exemtion amoutnt :-

.One person serves govt organisation and takes voluntary retirement seving continuously for thirty years and after that joins other govt. organisation on contract basis and receives earned leave encashment in both the govt organisation in a gap of 4 years (amount of earned leav encashment in first time was about Rs. 2,97,000 and after 4 year the same was about Rs.70,000) :- what will be the income tax treatment.

This is urgent