Tax on leave encashment

[udit gupta]

Dear Sir, Please suggest me :- Q:- Ramesh was working pvt ltd. company and he worked 6 year after he left the company Dated 10.10.10 and his basic salary of Rs. 3,00,000 at the time of leaving and his balance leave is 72 then what will be tax please advise. last basic - 300000 Leave balance - 72 date of leaving company- 10.10.10 Tax ??? Regards Udit

[CA Rachit Agarwal]

Please give the details of yearswise for which leave encashment to be granted.

This information is neccessary beacause leave encashment each year could not exceed 30 days per year. The words are "Each completed year of service".

AI Summary

Leave encashment exemption depends on completed years of service and the thirty-day per-year limit; supply years-wise breakup. Exemption on leave encashment is limited to the aggregate number of days permitted under Each completed year of service, subject to a 30 days per year ceiling; the remainder is taxable salary. The last drawn salary is used to value a leave day and the exemption is computed by multiplying that per-day salary by the permitted days across completed years. A years-wise breakout of encashed leave and completed service is necessary to determine the exempt portion.