Exemption of leave encashment to Bank Employee or PSU

[Lav Prajapati]

Whether employees of Nationalised Banks and Public Sector Undertakings are Government Employees ? And Leave Salary Encashment received by them is fully exempt or exempt upto specified Limit.

AI Summary

Bank and PSU staff not treated as government for income tax; leave encashment exempt only up to ?25 lakh s.10(10AA) Employees of nationalized banks and public sector undertakings are not treated as government employees for income-tax purposes; their service rules differ from central/state government service rules. Consequently, leave salary encashment received at retirement by such bank or PSU employees is not fully tax-exempt but is eligible for exemption only up to the statutory limit of ?25 lakh under section 10(10AA), whereas leave encashment for central or state government employees is fully exempt.