Today we will talked about Leave encashment
In case employee have not taken leaves and have opted for encashing those leaves, employer would be paying some amount as leave encashment. The amount so received on account of encashing the leaves not availed would be liable to tax under head “Income from Salary”.
Encashment of leave
during tenure of service of an employee, is fully taxable and
no exemption is allowed.
Leave encashment of accumulated leave at
the time of retirement whether on superannuation or otherwise
received by any other employee is exempt from tax to a certain limit. In such a
case, the least of the
following shall be exempted:-
- Leave encashment actually received
- 10 months “average salary”
- Cash equivalent of unavailed leave calculated on the
basis of maximum 30 days leave for every year of completed service.
Link to download the sample file
Nice info
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