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Leave enhancement at the time of retirement

Ari Narayanan K (22 Points)

12 August 2020

for Pvt company leave encashment at the time of retirement got 10 lacs is it fully exempted

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4 Replies

Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 12 August 2020

Leave encashment received by Private limited Company employee is exempt based on the computation provided under Section 10(10AA)(ii) and balance amount if any is taxable as ‘income from salary’.

Refer below link for more details

https://cleartax.in/s/leave-encashment-tax

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Ari Narayanan K (22 Points)
Replied 12 August 2020

Forwarded as Received:

LEAVE ENCASHMENT AT THE TIME OF SUPERANNUATION FULLY EXEMPTED FROM INCOME TAX W.E.F. 01.03.2018 FOR RETIREES RETIRED DURING 2018-19. WE OFFER OUR SINCERE THANKS TO SHRI M C GUPTA RETIRED SR. ENGINEER FROM SARAS DAIRY. MR I M AGRAWAL EX CM PNB FOR THEIR RELENTLESS EFFORTS WHO WAS TRYING HARD TO GET THE ANOMALY ADDRESSED BY CBDT. THE MESSAGE RECEIVED IS POSTED BELOW.
Good News for those retiree’s who retired in financial year 2018-19 and afterwards. When I was filing IT return I noticed that IT department has exempted income earned by way of earned leave encashment under Section 10 (10aa) which can be claimed under column:
Less:Allowances to the extent exempt u/S 10 under sub section 10 aa. All members retired in f/y 2018-2019 are advised to note it down and claim exemption under Leave Encashment. Regarding previously retired employees can claim it after filing revised return under the guidance of CA.
Regards
I M Agrawal
👇🏻👇🏻👇🏻👇🏻

Friends, who are retired after April,2018 they are eligible for exemption of IT section (10) sub section (10aa) under this section, your leave encashment is fully exempted & no tax is to paid, so if you have already deducted tax for leave encashment above 3.00 lacs can be refunded to you. Take care while filing return.
🙏🏼🙏🏼🙏🏼

Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 12 August 2020

Leave encashment rules are subject matter of IT Act, which can only be amended by parliament. CBDT cannot tinker with it. Such fake news should not be spread unless details of concrete notifications are provided.

Read more at: https://www.caclubindia.com/forum/leave-encashment-520278.asp

jacinthamary (accountant) (874 Points)
Replied 12 August 2020

In this matter I agree with Sagar Patel sir. If you are govt employee it is fully exempt for other 10 month salary or leave encashment amount whichever is less