Leave Encashmnet Benefit

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Querist : Anonymous

Querist : Anonymous (Querist)

17 March 2010 What is maximum tax benefit for leave encashment an employee avail. Can similar benefit available in each employment or it restricted to maximum benefit in the life time .

Rasesh

Rasesh (Expert)
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17 March 2010 Leave encashment while in service is taxable. Encashment of sick leave is taxable.

Leave encashment received at the time of retirement is fully exempt in the case of Government Servants. In the case of non-Govt. Employees, leave encashment is exempt to the extent of the least of the following four amounts: -

Rs. 3,00,000/-
Ten months' average salary;
Cash equivalent of the leave due at the time of retirement;
Leave encashment actually received at the time of retirement.
Here the average salary means the average of the salary drawn during the last ten months before retirement

In case of change of job, leave encashment is taxable. The benefit is not available for each employment but only in case of retirement.