Leave encashment is non-taxable at the time of leaving service only. If its paid in middle of employment, it will be taxable. Regards, Supriya
Dear Supriya,
Leave encashment is not taxable at the time of leaving service is a matter of dispute.
Generally the Income Tax Dept ensures that leave encashment is exempt only if it is received at the time of retirement.
Section 10(10AA) of IT Act states, leave encashment not taxable "on retirement or otherwise". The catch word here is 'otherwise', which suggest there are certain exemptions in the case of a person leaving his job for reasons other than retirement.
There are judgments of High courts which confirms that leave encashment is not taxable at the time of resignation also.
In most of the private organizations tax is deducted leave encashment at the time of resignation. Employees have options to file tax return and claim the refund.
regards,
Kamal
From India, Pune
173Leave encashment is not taxable at the time of leaving service is a matter of dispute.
Generally the Income Tax Dept ensures that leave encashment is exempt only if it is received at the time of retirement.
Section 10(10AA) of IT Act states, leave encashment not taxable "on retirement or otherwise". The catch word here is 'otherwise', which suggest there are certain exemptions in the case of a person leaving his job for reasons other than retirement.
There are judgments of High courts which confirms that leave encashment is not taxable at the time of resignation also.
In most of the private organizations tax is deducted leave encashment at the time of resignation. Employees have options to file tax return and claim the refund.
regards,
Kamal
From India, Pune
Dear Asmita Ji
Leave encashment during service period is taxable. It is not taxable when one gets it at the time of superannuation/retirement/termination of service. If you leave one job and take up another and get leave encashment from former employement, it is not taxable income.
From India, Pune
Leave encashment during service period is taxable. It is not taxable when one gets it at the time of superannuation/retirement/termination of service. If you leave one job and take up another and get leave encashment from former employement, it is not taxable income.
From India, Pune
Hi all, Thank you all for your prompt response to the post. In my company, accounts department says leave encashment is taxable at the time of resignation. Regards
From United Kingdom, Newcastle upon tyne
From United Kingdom, Newcastle upon tyne
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PF Contribution on Leave Encashment - Clarification by EPFO.pdf
SC -PF judgment on No PF on Leave encashment.doc
EPFO Circular Leave Encashment.jpg