Tax on Leave Encashment on retirement from public sector Bank

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Sir, I retired from bank on 31.05.2011. I received leave encashment of Rs.406924 and the bank has deducted Rs. 6200/- towards TDS. Please let me know whether the entirement amount is fully exempted or Rs.3lac only.

2 Answers

If case of central or state govt. employee leave encashment would be fully exempt from income tax.

But In case of other employees, 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

According to IT Act there are are two categories of employees Govt, & employees of private corporations,How can employees of P,S,U s,wholly owned by Central Govt,, whose pay and perks are fixed by 6th,Pay Commission, like Govt. servants not get tax benefit upto 10 lakhs ?

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