Question And Answer
Subject: Leave encashment on retirement
Category: 
Querist: Manoj Kumar Agarwal
Answered by:
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Date: December 14, 2025
Query asked by Manoj Kumar Agarwal

I retired from SBI on 30.11.21

Can I claim exemption now upto 2500000 by filing revised ITR

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Answer given by

There is a controversy over the taxability of leave encashment. The CBDT Notification No. 31/2023 (dated 24 May 2023) which increased the exemption limit for leave encashment on retirement for non-government employees (including PSU bank employees like SBI) from ₹3 lakh to ₹25 lakh, is effective from 1 April 2023 (AY 2024-25 onwards). Though, it is prospective, several recent ITAT benches have treated it as beneficial/clarificatory and applied it retrospectively to earlier years.

In your case, the deadline for filing a revised return for FY 2021-22 (AY 22-23) has expired. You can try to file a rectification application and if that is rejected, yu may file an appeal to the CIT(A).



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