Leave encashment exemption

Yes, you can claim the exemption of leave encashment while filing your IT Return. The deduction will be allowed even if the employer has not provided in Form 16. 

Leave encashment received by Central or State Government employees at the time of retirement or resignation is fully exempt.

From my understanding, you are referring to a non-government company. In this case, leave encashment will be exempt u/s 10(10AA)(ii)  up to the least of the following: 

1. Actual leave encashment amount

2. Average salary* for last 10 months 

3. Salary per day * unutilised leave (considering maximum 30 days leave per year) for every year of completed service (F)

4. Maximum allowed as deduction 3,00,000

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- If you were employee of Central or state govt then amount of cash equivalent of leave salary received is exempt from tax.

- In case of employee other then central or state govt, least of the following is exempt

1) Cash equivalent of the leave salary (earned leave entitlement cannot exceed 30 days for every year of actual service rendered)

2) 10 months average salary

3) Rs.3,00,000

4) leave encashment actually received

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Leave encashment received by Central or State Government employee at the time of  retirement or resignation is fully exempt.

Leave encashment received by Non-Government employee is exempt based on the computation provided under Section 10(10AA)(ii) and balance amount if any is taxable as ‘income from salary’.

Formula for computing leave encashment exemption of Non-government employees:

*Salary for this purpose includes basic salary, dearness allowance and commission based on fixed percentage of turnover secured by employee** Specified amount of Rs 3,00,000 is the aggregate amount allowed as exemption irrespective of frequency of leave encashment received by employee by various employers. If an employee has utilised Rs 2,00,000 already at the time of first resignation, he is only entitled to use balance of Rs 1,00,000 for the exemption computation next time. Hence, overall employee is allowed total exemption of only Rs 3,00,000 with respect to leave encashed from all employers.

Yes, you can claim the exemption directly. Formula for calculating the exemption is as below. Least of the following is exempt.

1. Amount received as leave encashment
2. Maximum amount stated by government i.e. 300000
3. last 10 months of basic salary and DA
4. Salary per day*unutilised leave (consider maximum 30 days leave per year) for every year of completed service

Yes you can claim the exemption in your ITR. Exemption is calculated as:

Leave encashment received (A)

XXXXX

Less: Exemption under Section 10(10AA) –   (B) Least of the following:

XXXX

Amount notified by the Government** Rs 3,00,000 (C)

3,00,000

Actual leave encashment amount (D)

XXXX

Average salary* of last 10 months (E)

XXXX

Salary per day * unutilised leave (considering maximum 30 days leave per year) for every year of completed service (F)

XXXX

Leave encashment taxable – (A) – (B)

XXXX