An Employee who works in Private Organization and does a service of 20 years.
10 days Leave encashment allowed every year (Out of 30 days remaining 20 days is Sick and Casual Leave).
Employer Encash the leave over and above 90 days during every year and the amount received by the employee is fully taxable.
On the date of retirement employee received 90 days a Leave encashment. Is this amount is subject to Tax?
Leave Encashment Tax Exemption Clarified: 90 Days' Retirement Leave Under Section 10(10AA)(ii) of Income Tax Act An employee from a private organization inquired about the taxability of leave encashment upon retirement after 20 years of service. The employee received 90 days of leave encashment at retirement and sought clarification on its tax status. Kasturi Sethi explained that under Section 10(10AA)(ii) of the Income Tax Act, leave encashment up to a certain limit is exempt from tax, provided it does not exceed ten months of earned leave. Dr. Mariappan Govindarajan agreed with Sethi's interpretation, confirming the exemption for the 90 days' leave encashment received at retirement. (AI Summary)
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