Leave Encashment

Babu0207 1
Viewed 1764

Hi sir,

My company(Distributor) was takeovered by MNC Company(Principle), While takeover we have submitted formal resignation and Joined in second company. From my previous company i have receieved Leave encashment for 63 Days but Gratutity has been transfered.Now i would like to know whether This leave encashment is taxable or not.

section-10-10aa non-taxable leave-encashment income-tax
1 Answers

If you have resigned from previous company and full and final settlement has been done formally, then you can claim leave encashment amount as non taxable under section 10(10AA).

but the exemption is to be limited to minimum of all below:

  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
Pankaj Batra5212

Thank you very much for your Answer

I have a doubt, what is this 30dya per year of service.For example if i have worked for 5 years am i eligible for tax exemption for 150 leaves?

Babu0207•

Max tax exemption would be minimum of all above figures.

If you received less amount than cash equivalent of 150 leaves, 10 months salary or 3 lakh, then whatever you received would be non taxable.

Pankaj Batra•
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