Government Increased limit for tax exemption on leave encashment for non-government salaried employees.
June 07, 2023
Earlier, As per section 10(10AA)(ii) of the Income Tax Act, 1961 (the Act), Exemption for leave encashment (in respect of the period of earned leave at his credit at the time of his retirement, whether on superannuation or otherwise) in case of non-government salaried employees was up-to a limit of INR 3 Lakh.
CBDT through the Notification No. 31/2023 dated 24-05-2023 has increased exemption for leave encashment in case of non-government salaried employee from INR 3 lakh to INR 25 Lakh. This notification will be effective from 01-04-2023.
Where any such payments are received by a non-government employee from more than one employer in the same previous year, then the aggregate exemption under section 10(10AA)(ii) of the Act shall not exceed the limit of INR 25 lakh.
Further, the exemption under section 10(10AA)(ii) of the Act shall not exceed the limit of INR 25 lakh as reduced by the tax exemption already allowed under section 10(10AA)(ii) of the Act in any previous year or years.
Last updated: 07/06/2023
Article contributed by:
Senior Executive – Direct Tax
