SECTION 10(10AA) l LEAVE SALARY

74. Leave salary - Specification of exemption limit in relation to employees who retire, whether on superannuation or otherwise, within the specified period, under sub-clause (ii) of clause (10AA)

NOTIFICATION 1

In exercise of the powers conferred by sub-clause (ii) of clause (10AA) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government, having regard to the maximum amount receivable by its employees as cash equivalent of leave salary in respect of the period of earned leave at their credit at the time of their retirement whether on superannuation or otherwise, hereby specifies the amount mentioned in column (2) of the Table below as the limit in relation to employees mentioned in that sub-clause who retire, whether on superannuation or otherwise, within the period mentioned in the corresponding entry in column (3) of the said Table :

TABLE

Notification : No. SO 553(E), dated 8-6-1988.

NOTIFICATION 2

In exercise of the powers conferred by sub-clause (ii) of clause (10AA) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government, having regard to the maximum amount receivable by its employees as cash equivalent of leave salary in respect of the period of earned leave at their credit at the time of their retirement whether on superannuation or otherwise, hereby specifies the amount mentioned in column (3) of the Table below as the limit in relation to employees mentioned in that sub-clause who retire, whether on superannuation or otherwise, within the period mentioned in the corresponding entry in column (2) of the said Table :

TABLE

Notification : No. SO 249 (E), dated 26-3-1996.

NOTIFICATION 3

In exercise of the powers conferred by sub-clause (ii) of clause (10AA) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government, having regard to the maximum amount receivable by its employees as cash equivalent of leave salary in respect of the period of earned leave at their credit at the time of their retirement, whether on superannuation or otherwise, hereby specifies Rs. 2,40,000 (Rupees two lakhs and forty thousand only) as the limit in relation to employees mentioned in that sub-clause who retire, whether on superannuation or otherwise after the 1st day of July, 1997.

Notification : No. SO 1015(E), dated 27-11-1998.

NOTIFICATION 4

In exercise of the powers conferred by sub-clause (ii) of clause (10AA) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government, having regard to the maximum amount receivable by its employees as cash equivalent of leave salary in respect of the period of earned leave at their credit at the time of their retirement, whether superannuation or otherwise, hereby specifies the amount of Rs. 3,00,000 (rupees three lakhs only) as the limit in relation to employees mentioned in that sub-clause who retire, whether on superannuation or otherwise, after the 1st day of April, 1998.

Notification : No. SO 588(E), dated 31-5-2002

Excempt from tax if u r a govt sector employee

if pvt sector ,than taxable as per income tax  act ,1961

The least of A. B, C  & D will be the exempted amount. Balance will be taxable.

My friend is a Government employee. Earlier, he was in Non-industrial cadre from which he has been abosorbed to Industrial cadre with continuity in service.Since the leave accumulated in Non-industrial cadre can not be carried forward to Industrial cadre, his leave accumulated in Non-industrial cadre was encashed during FY 2014-15 and paid. Pl let me know whether this leave encashmnet, which was not at the instance of my friend but official procedure, is taxable or not.

Thanks