Tax exemption limit of Leave Encashment increased to INR 25 Lakhs

Central Board of Direct Taxes increased limit of Leave Encashment exemption u/s 10(10AA) to Rs. 25 Lakhs for Non- Government Employees

Central Board of Direct Taxes through Income tax Notification No. 31/2023 dated 24^th May 2023 has notified INR 25,00,000/- as exemption limit U/s 10(10AA) with regard to Leave Encashment received by non-government employees on retirement. Before the Notification, Exemption limit was INR 3,00,000/-. This Income tax notification has comes into effect from 1^st April 2023.

Furthermore, the Central Board of Direct Taxes provided the following clarification regarding Notification No. 31/2023 in an Income Tax Press Release dated 25.05.2023:

• Where such payments are received by a non-government employee from more than one employer in the same preceding year, the total amount exempt from income-tax u/s 10(10AA)(ii) shall not exceed the limit of INR 25,00,000/-.
• The amount exempt from income-tax under Section 10(10AA)(ii) shall not exceed a maximum of INR 25,00,000/- after deducting any prior tax exemptions from the employee's total income U/s 10(10AA)(ii) of any prior year or years.

Details Income Tax Notification No. 31/2023 dated 24^th May 2023

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