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Leave encashment

20 April 2010

Pls help.

LEave encashment for government employees is exempt from taxation at the time of retirement. Suppose, a government employee receives his leave encashment exceeding Rs.3,00,000/- at the time of retirement, is the excess of Rs. 3 lacs taxable????

Pls help...

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6 Replies

Kaushik Vankadkar (Service) (350 Points)
Replied 20 April 2010

yes only excess is taxable

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Amir (Learner) (4016 Points)
Replied 20 April 2010

Dear Kaushik,

Bhai I think u missed out on the word "GOVT." in the query...

Any amount of Leave Enacshment received by a GOVT. Employee on retirement is Fully Exempt u/s 10(10AA)

The limit is applicable for other employees (Pls note that employees of PSU are covered under this category as other employees)

Any amount of leave encashment received during the job is FULLY TAXABLE for ALL employees whether Govt. or Others.

Kaushik Vankadkar (Service) (350 Points)
Replied 20 April 2010

I m sorry I missed govt employees.

Vivek Angrish (Manager Finance & Accounts) (232 Points)
Replied 20 April 2010

Hi,

I want to know that what if non-govt. employee joins organization on 05/04/2008 and resigned on 30/09/2009, and he is entitled for 30 leaves as earned leaves per year. His average ten months salary is Rs. 268750/- and he have received Rs. 304167/- against 36.5 days leave in his credit at the time of retirement at Rs. 8333/- per day as amount of leave encashment at the time of resigning. He has availed 3.5 Days leave in the year 2008-09 and 5 days leave in the year 2009-10.

Now will anyone please help me to calculate the exemption limit in this case.