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Tejas Chokshi | Answer |Ask -Follow

Tax Expert - Answered on Aug 07, 2023

CA Tejas Chokshi has over 20 years of experience in financial planning, income tax planning, strategic and risk advisory, banking and financial products and accounting and auditing.
He is an information system auditor, a forensic auditor and concurrent bank auditor.
Chokshi, who has a master’s degree in management, audit and accounting from Gujarat University, has completed his CA from the Institute of Chartered Accountants of India.... more

Asked by Anonymous - Jul 27, 2023Hindi

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Can I claim tax exemption of Rs 3 lakhs as non-government employee on money received through HPL encashment at the time of retirement ? The employer has not mentioned about this exemption in Form 16. Question arises as the tax notification mentions about Earned leave.

Ans: according to Section 10(10AA) of the Income Tax Act, 1961, leave encashment received by a non-government employee at the time of retirement is eligible for a tax exemption up to a certain limit. As of my last update, the exemption is provided to the extent of least of the following three amounts:

The actual amount of leave encashment received.
The amount specified by the government (Rs. 3 lakhs in this case, as you mentioned).
The average salary of the last 10 months preceding retirement, multiplied by the number of days of earned leave at the credit of the employee at the time of retirement, divided by 30.
If your employer has not mentioned this exemption in your Form 16, it could be an administrative oversight. It's generally the responsibility of the employer to correctly calculate and mention such exemptions in the Form 16.

In case your Form 16 does not include the correct exemption for leave encashment and you are eligible for the exemption, you should contact your employer to rectify the Form 16

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.

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I have retired from central PSU in FY 23. Is money received as HPL encashment at the time of retirement tax exempted ?

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Thus, in my view HPL being similar nature exempt from tax.

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Dear sir, i was an ex-PSU employee & retired on 31.01.23. I received my post-retirement leave encashment pay in the month of APRIL. Now, am I eligible for tax exemption of Rs 25 lacs ( earlier 3 lacs) on leave encahment which has been declared in the budget FY 23-24? so, can i claim this exemption for filing itr AY 24-25?

Ans: In pursuance to the proposal in the Budget Speech, 2023, by the hon’ble FM,
the Central Government has notified the increased limit for tax exemption on leave
encashment on retirement or otherwise of non-government salaried employees to Rs.
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sir, i am an ex-psu employee & retired on 31st january, 2023. i have received leave encashment payment on retirement in april, 2023. Am i eligible to claim tax exemption of rs 25 lacs on leave salary while filing itr for fy 23-24? kindly advise.

Ans: In pursuance to the proposal in the Budget Speech, 2023, by the hon’ble FM,
the Central Government has notified the increased limit for tax exemption on leave
encashment on retirement or otherwise of non-government salaried employees to Rs.
25 lakh w.e.f. 01.04.2023.

There is no change for gov empleoyee. While in the case of Central/State Government employees, the entire leave encashment is exempt from tax

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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