I am going to retire from Govt. PSU ONGC, I want to know that weather fully tax exemption is available on leave encashment after retirement or up to only 3 lacs limit. as i read some where that in Govt service , there is fully exemption and in Pvt. Sector exemption for only 3 lacs.. Kindly clarify me any learned income tax counsillor. thanks.. ANIL SHARMA...
Govt Employees (Central Govt and State Govt employees only): Leave encashment of accumulated leave at the time of retirement, whether on superannuation or otherwise, received by a Govt employee, is fully exempt from tax. No tax would be levied on any amount received as leave encashment by govt employees on retirement.
Other Employees: Leave encashment of accumulated leave at the time of retirement whether on superannuation or otherwise received by any other employee (except those covered above) is exempt from tax to a certain limit. In such a case, the least of the following shall be exempted:-
Leave encashment actually received
10 months “average salary”
Cash equivalent of unavailed leave calculated on the basis of maximum 30 days leave for every year of completed service.