Tax exemption limit for private employees’ leave encashment has been increased!

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    The tax exemption threshold for privately paid employees’ leave encashment was raised by the central government on Thursday from Rs 3 lakh to Rs 25 lakh.

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    The new Tax exemption threshold will be in 

    place in 2023. As promised by Finance Minister Nirmala Sitharaman during this year’s Union Budget speech, the move has been announced by the finance ministry.

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    When such payments are received

    by a non-government employee from many employers, the total amount exempt from income tax under section 10(10AA)(ii) shall not exceed the ceiling of Rs 25 lakh, according to the Central Board of Direct Taxes (CBDT).

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    According to the CBDT,

    the central government raised the limit for tax exemption on leave encashment for non-government salaried employees upon retirement or in other circumstances from Rs. 25 lakh to Rs. 25 lakh as of April 1, 2023, “in pursuance to the proposal in the Budget speech, 2023.” The prior limit of Rs 3 lakh has not changed since 2002.

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