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Taxability arrears of leave encashment
If after retirement, salary has been revised due to which you are eligible for leave encashment. This leave encashment received after retirement is exempt?
Replies (1)
Treatment of leave encashment u/s 10(10AA) of Income Tax Act 1961
| S.N | Leave encashment timing | Govt Employees | Non-Govt Employees |
| 1 | During period of service | Fully taxable | Fully taxable |
| 2 | At the time of retirement or separation (other than on account of Termination) | Fully exempt | Exemption is least of the following: 1) Rs 3,00,000 2) Leave encashment amount actually received 3) 10 months’ salary (on the basis of average salary of last 10 months ) * 4) Cash equivalent to leave to the credit of employee at time of retirement ** |
| 3 | At the time of termination of employee | Fully taxable | Fully taxable |
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