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Anil Rego |388 Answers |Ask -Follow

Financial Planner - Answered on Oct 07, 2022

Anil Rego is the founder of Right Horizons, a financial and wealth management firm. He has 20 years of experience in the field of personal finance.
He’s an expert in income tax and wealth management.
He has completed his CFA/MBA from the ICFAI Business School.... more

Question by Sanjoy on Oct 07, 2022Hindi

Money

TAX IMPLICATION ON LEAVE ENCASHMENT AMOUNT ON NORMAL RETIREMENT FOR A PSU BANK EMPLOYEE

I have retired normally from a PSU Bank. I have been given exemption of Rs 3 lakh from the leave encashment amount (eight months equivalent salary) on retirement and rest amount has been taxed by bank. As the Government employees are fully exempted, being a PSU bank employee, am I not eligible for the same benefit?

Ans: The PSUs and nationalised banks are not treated as central and state government employees. Hence for leave encashment, they cannot take the benefit of unlimited exemption.

For a PSU employee (including a PSU Bank), the maximum exemption allowed on leave encashment is Rs 3 lakh in your case.

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 October 2022. Whether my Earned Leave Encashment amount I received during my retirement is taxable during current year, since exemption amount increased from Rs. 3.00 Lakhs to Rs. 25.00 Lakhs.

Ans: Hello Investor

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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,
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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
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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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