A Query by an empolyee of a nationalized Bank.

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A Query by an empolyee of a nationalized Bank.

Sir, Good Morning

Please guide me in the matter, that I had been retired from Bank Service in the month of January’ 2019.

I received amount ₹ 7.50 lac under the head of Retirement leave encashment benefit.

Please guide, shall I eligible to claim the exemption on full amount of supernuation leave encashment or upto 3.00lac only under IT Act. Sec. 10AA. Somebody, told me that full exemption is allowed all type of employe by CBDT w.e.f. 01.03.2018.

Sir. Requested to guide me accordingly.

Thanks for the query.

Reply

For tax treatment of leave encashment u/s 10(10AA) of Income Tax Act 1961 the employees has been classified into two types:

1) Govt Employees and

2) Non-Govt employees (PSU employees are considered as non-govt employees)

Therefore you being a Non Government Employee following taxation shall apply as under:-

At the time of retirement or separation (other than on account of Termination) Leave Exemption is least of the following:
1) Rs 3,00,000
2) Leave encashment amount actually received
3) 10 months’ salary (on the basis of average salary of last 10 months ).
4) Cash equivalent to leave to the credit of employee at time of retirement

Note:

  1. For only government  employees Leave encashment is fully exempt.

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