| Question And Answer | |
|---|---|
| Subject: | To claim Tax exemption on leave encashment for AY 2021-22. Tax paid over 3 lakh. |
| Category: | Income-Tax |
| Querist: | Ratiwant Kumar Mallik |
| Answered by: | Law Intern |
| Tags: | leave encashment, LEAVE ENCASHMENT EXEMPTION |
| Date: | December 14, 2025 |
I retired from Bank on Jan 31, 2021. As per then IT rules, tax was paid on leave encashment over and above 3 lakhs for the amount being 20 lakhs. I tried for full exemption but in online form it was not accepted stating that I am not a government employee. In 2023, the exemption limit was enhanced to 25 lakhs from 3 lakhs. I felt cheated. As I observe, a person retired in FY 2020-21 like me, claiming such exemption through ITAT, succeeded in getting exemption.
I also want to avail this exemption. How it will be done.
Various ITAT Benches have taken the view that the CBDT Notification No. 31/2023 dated May 24, 2023 by which the limit was enhanced to ₹25 lakhs, effective from April 1, 2023, has retrospective application as it is beneficial.
To benefit from this, you should file a rectification application. If this is denied, you should file an appeal with the CIT(A) and then the ITAT.