The Indian Ministry of Finance’s Department of Revenue has announced an increase in the tax exemption limit for leave encashment for non -government salaried employees. Previously, the exemption limit was set at Rs.3 lakh under section 10(10AA) (ii) of the IT Act, 1961. However, Central Government has raised the limit to Rs.25 lakh, effective from April 1, 2023.
If a non-government employee receives such payments from multiple employers within the same year, the total exempted amount under section10 (10AA)(ii) should not exceed Rs.25 lakh. Additionally, the tax exemptional already allowed in previous years’ total income must be subtracted from the Rs.25 lakh limit.
The notification for this change, numbered 31/2023 and dated May 24, 2023, has been published.
