16 March 2015
Leave encashment by government employee at the time of retirement or resignation from a job is is fully exempt from tax under section 10(10AA)(i).
For non- government employees can avail tax exemptions if leave encashment is done at the time of retirement or resignation from a job. The lowest amount from the following calculations will be exempted from tax under section 10(10AA)(ii):
# Period of earned leave in no. of months multiplied by average monthly salary. Maximum of 30 days of earned leave per year for completed years of service is taken into consideration. # 10 times of average monthly salary. # Rs 3,00,000/- Or #leave encashment actually received.
However, please note the below:
# If an employee receives leave encashment from more than one employer, the quantum of exemption will be computed independently in respect of each employer. # The total amount of exemption should not exceed Rs.3,00,000/- during his lifetime.
CAclubindia
