Date : 27-05-2022
PAYMENT OF LEAVE ENCASHMENT AT THE TIME OF
RETIREMENT IS FULLY EXEMPT FROM INCOME TAX
SINCE BEGNING i.e., 1961
As per Chapter-III of Income Tax rule clause 10 (10AA) Sub section 2nd the payment received by an employee other than central Government or State Government likewise Bank Insurance, PSU at the time of his retirement is fully exempt if you have received leave encashment payment at the time of retirement is less or equal to the entitlement of the Cabinet Secretary of Central Government. At present the salary of the Cabinet Secretary is 3.35 Lacs per month so his leave encashment entitlement is 33.50 Lacs. The employee who covered under subclause-II is entitled to take the exemption up to 33.50 Lacs as per rules. The existing rule is crystal clear there is no doubt. Central Board of Direct Tax also recently given a clarification in Nov. 2021 through a booklet named 75 Azadi Ka Amrit Mahotsav that this payment is non-Taxable if you have received a payment up to 10 months’ salary. (Copy enclosed) in this clarification it is very important that neither they have mentioned the condition of gazette notification nor the 3 lacs amount which was declared in the year 2002. The employee retired in financial year 21-22 and Tax deducted as source above 3 lacs payment are suggested to claim full amount exemption by filing income tax return for assessment year 2022-23.
For more clarification you may contact 9928991918 of M C Gupta
IS THIS TRUE? AS A RETIRED GRAMIN BANK EMPLOYEE, I FILED FOR EXEMPTION OF 3 LACK RUPEES IN LEAVE ENCASHMENT, WANT TO KNOW IF IT IS FULLY EXEMPTED?
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