Leave encashment at the time of service is fully taxable. Leave encashment at the time of retirement is not taxable for Government Employees. Leve encashment received by the legal hair of deceased employee is fully exempted. But for other employees, an exemption is provided u/s 10(10AA)(ii) as per tRead more
Leave encashment at the time of service is fully taxable.
Leave encashment at the time of retirement is not taxable for Government Employees. Leve encashment received by the legal hair of deceased employee is fully exempted.
But for other employees, an exemption is provided u/s 10(10AA)(ii) as per the below method:
| Leave encashment received | 200000 |
| Average salary* of last 10 months | 180000 |
| Salary per day * Balance of earned leave for service span (Maximum 30 days leave per year for every year of completed service is allowed) | 250000 |
| Amount notified by the Government Rs 3,00,000 aggregate. | 3,00,000 |
| Leave encashment Exemption(Lower of above) | 180000 |
*Salary means basic salary, dearness allowance, and commission based on a fixed percentage of turnover secured by the employee.
So the taxable amount is Rs 2,00,000-1,80,000=20,000/-
See less
Advance Salary and bonus become taxable in the year of actual receipt on the basis of the tax rates applicable in the year of receipt. However, Assess can claim relief under section 89(1) of the Income Tax Act.
Advance Salary and bonus become taxable in the year of actual receipt on the basis of the tax rates applicable in the year of receipt. However, Assess can claim relief under section 89(1) of the Income Tax Act.
See less