Leave Encashment

[KUMAR Narasimhan]

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?

AI Summary

Leave encashment exemption limits retirement cash equivalents of earned leave for non-government employees under a statutory cap.
Payments of leave encashment during employment are fully taxable, while payments on retirement qualify for a conditional exemption under Section 10(10AA) for the cash equivalent of earned leave up to the statutory cap; the statutory explanation limits earned leave entitlement to thirty days per year of service with the retiring employer, so retirement encashment within that entitlement falls within the exempt portion, subject to aggregate limits and adjustments for multiple employers or prior receipts.