Please suggest wheather encashment of Sick Leave at a time of retirement is fully taxable as per Income Tax Act 1961 ??
1 Replies
Madav
(Senior Consultant)
(172 Points)
Replied 12 August 2014
It depends on the organization for which you work for
If you are government employee (central or state government employee) than any type of leave encashment at the time of retirement is fully exempt u/s/ 10(10AA).
For others it is exempted to the extent of the minimum of the following four amounts
1. Leave encashment actually received
2. 10 months of 'average salary'
3. Cash equivalent of unavailed leave calculated on the basis of maximum 30 days leave for every year of actual service rendered to the employer from whose service he has retired , the cash equivalent is to be calculated on the basis of the avaerage salry
4. amount specified by governement i.e. 300000
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