| Question And Answer | |
|---|---|
| Subject: | LEAVE ENCASHMENT |
| Category: | Income-Tax |
| Querist: | SANJAY KUMAR PANDYA |
| Answered by: | Advocate Shashi Ashok Bekal |
| Tags: | leave encashment |
| Date: | October 18, 2022 |
WHETHER LIMIT OF Rs. 3 LAC MAXIMUM IS APPLICABLE ON PRIVATE EMPLOYEES OR ALLOWABLE LIMIT CAN BE EQUAL TO GOVERNMENT EMPLOYEE. SINCE CBDT HAVE NOT NOTIFIED ANY LIMIT LATER THAN YEAR 2002, WHAT SHOULD BE PRESENT POSSITION.
It is important to note whether the leave encashment is during service or at the time of retirement/resignation. Leave encashment during service is fully taxable under the heading “Income from salary”. For private sector employees, leave encashment is taxable and an exemption is provided as per the computation laid down under section 10(10AA) of the Income-tax Act, 1961. The maximum exemption is Rs. 3,00,000/-.
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