The Central Board of Direct Taxes (CBDT) on May 25, 2023, Increased the limit for tax exemption on leave encashment for non-government salaried employees notified.
The following has been stated namely: -
• The tax exemption on leave encashment of non-government salaried employees (in respect of the period of earned leave at his credit at the time of his retirement, whether on superannuation or otherwise) was earlier up to a limit of Rs.3 lakh only under section 10(10AA)(ii) of the Income-tax Act,1961(the Act).
• The limit for the tax exemption has been increased on leave encashment on retirement or otherwise of non-government salaried employees to Rs. 25 lakhs with effect from April 01, 2023.
• The aggregate amount exempt from the income-tax under section 10(10AA)(ii) of the Act shall not exceed the limit of Rs. 25 lakh where any such payments are received by a non-government employee from more than one employer in the same previous year.
• The amount exempt from income tax under section 10(10AA)(ii) of the Act shall not exceed the limit of Rs. 25 lakhs as reduced by the tax exemption already allowed in the total income of the employee under section 10(10AA)(ii) of any previous year or years.
