Leave Encashment Taxexepmtion

Need tehe clarification on whether the Employer who is creating the Leave Eashment Fund with the insurance companies is taxable.

And the amount of leaves accumulated for each employee, where the setup of leave encashement fund is with insurance company,is he/she while recivieng the leave encashment in his/her hands are tax free..

Pls clarify

asked Jul 09 '11 at 19:44 by Dinesh 1111


Amount received on leaving a company or retirement for leave encashment is non-taxable upto below limits: 1. The actual amount received
2. The cash equivalent of leave balance (max 30 days per year of service)
3. Maximum of 10 months of leave encashment, based on last 10 months average salary
4. Rs. 3 Lakhs

There will be no income tax exemption in case of leave encashment in the middle of job (without resignation/retirement)

answered Jul 11 '11 at 12:48 by pankaj 5.2k320

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Asked: Jul 09 '11 at 19:44

Seen: 1,596 times

Last updated: Jul 11 '11 at 12:48