I would like to introduce myself as Shankar Krishnan,Retd Chief General Manager of Odisha Power Transmission Corporation Ltd(OPTCL).I started my service as Asst Engineer in Odisha Govt Energy Dept in 1984 and subsequently on Electricity Power Reforms opted to join the above corporation on 1st April,1997 with continuity of service and with leave balance of say around 177 days.I opted for pension for the period rendered under Govt.Leave Salary was not paid to me at that time.Now I retired from OPTCL on 29th February,2020 and was paid Leave Salary of 300 days but the same was taxed after availing 3 lakhs benefit. My question is why the leave salary balance under govt will not be taken into account and the leave salary of 123 days under the corporation should only be taxed.
Hi, Thanks sir for asking this question. I can understand your concern and is practical too. However, unfortunately under income tax rules for exemption, your last employment at the time of retirement is taken into consideration which is a corporation. There is no provision in Income Tax to break the leave balance into two parts and claim exemption. Please revert if you need any other clarification
Regards,
Yash Shah
Leave salary balance by government is totally exempt but in any other case it will be exempt only upto maximum Rs. 3 lakh u/s 10(10AA).
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Thank you.
Dear Sir,
Hope you are doing well !!
The exemption us/ 10(10AA)(ii) is with limit of Rs 3 Lakhs and is applicable to an employee, other than an employee of Central Government or a State Government.
Accordingly, you will get exemption only Upto 3 lacs.
Hi
At the time of retirement, an employee is entitled to exemptions under Section 10(10AA). ... While leave encashment is completely tax-free for government employees at the time of retirement, it is partially exempted from tax in case of non-government employees
The least of the following are exempted:
The remaining amount received would be taxable as per the Income tax slab rates
Leave encashment paid by State govt/ Central govt are fully exempt.
However, since you have received leave encashment from corporation and not the govt, it will be exempt to the extent of 3 lacs.
