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Amount received as Leave Encashment on Retirement [Section 10(10AA)]

As per section 10(10AA), leave encashment by a Government employee at the time of retirement (whether on superannuation or otherwise) is exempt from tax.

 

In the hands of non-Government employee exemption will be least of the following:

Govt. employee i.e. Central and State Govt. employees

Any other employee

Fully Exempt

Minimum of the following four limits:

  1. Leave encashment actually received; or
  2. 10 months average salary; or
  3. Cash equivalent of un-availed leave calculated on the basis of maximum 30 days leave for every year of actual service rendered; or
  4. `.3,00,000

Meaning of salary :

  1. Basic salary plus D.A. to the extent the terms of employment so provide plus Commission, if fixed percentage of turnover.
  2. Average salary of last 10 months immediately proceeding the date of retirement.
 
Index of Exempted Incomes (Section 10)

 

 

Related Topics.... Exempted Incomes :

List of Exempted Incomes (Tax-Free) Under Section-10
Section-wise Index of Exempted Incomes Under Section 10
Gratuity Received by a Non-Government Employee covered by Payment of Gratuity Act, 1972 [Section 10(10)(ii)]
Gratuity [Section 10(10)]
Commuted value of Pension Received is Exempt from Tax [Section 10(10A)]
Amount received as Leave Encashment on Retirement [Section 10(10AA)]
Retrenchment Compensation received by Workmen [Section 10(10B)]
'Retirement Compensation' from a Public Sector Company or any other Company is Exempt from Tax [Section 10(10C)]
Any sum received under a Life Insurance Policy [Section 10(10D)]
Exemption in respect of Amount Received from any Provident Fund (PPF/SPF/RPF/URPF) [Section 10(11), 10(12)]
Payment from Superannuation Fund [Section 10(13)]
House Rent Allowance-HRA [Section 10(13A) Read with Rule 2A]
Any Allowance given for meeting Business Expenditure [Section 10(14)]
Interest Incomes [Section 10(15)]
Income of certain Funds of National Importance, Educational Institutions and Medical Institutions [Section 10(23C) and Rules 2C and 2CA] :
Income of Core Settlement Guarantee Fund [Section 10(23EE)]
Any income of a Corporation established for Ex-Servicemen [Section 10(26BBB)]
Certain Interest to Non-Residents [Section 10(4)]
Leave Travel Concession or Assistance (LTC/LTA) [Section 10(5)]
Salary or Remuneration to Foreign Employee and Non-Resident Member of Crew [Section 10(6)]
 
 
 
 
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