CBDT Notification: Rs. 25 Lakhs Leave Encashment Limit For Non-Government Salaried Employees

CBDT Notification: Rs. 25 Lakhs Leave Encashment Limit For Non-Government Salaried Employees

A new notification from the Central Board of Direct Taxes has declared an increase in leave salary encashment limit for non-government employees from Rs. 3 lakhs to Rs. 25 lakhs. This new rule will be applicable from FY 2023-24, from 1st April 2023. On 24th May, the CBDT issued an official notification.

According to the notice, due to the powers exercised by sub-clause (ii) of clause (10AA) of Section 10 of the Income-Tax Act, 1961 (43 of 1961), the equivalent cash amount specified by the central government for earned leave salary is Rs. 25,00,000. This limit is in relation to those employees mentioned in the sub-clause who retire, based on superannuation or for other reasons. 

This notification is a step toward implementing the Budget 2023 proposal. The proposal promised an increment of tax exemption limit earned on leave encashment. This increment was meant to go up to Rs. 25 lakhs from Rs. 3 lakhs for non-government employees. 

According to the Finance Ministry, a non-government employee will receive payments not exceeding Rs. 25 lakhs from a single employer as an aggregate amount exempt from income tax under Section 10 (10AA) (ii). The previous limit of Rs. 3 lakhs was set in 2002. 

The finance ministry also claimed that other parts of the Budget 2023 proposal are to benefit senior citizens and middle-class taxpayers. The tax rebate limit under New Tax Regime has increased to Rs. 7 lakhs, but this year’s budget.

This makes income up to Rs. 7 lakhs tax-free for those registered under the regime. No tax needs to be paid by salaried employees due to the standard deduction of Rs. 50,000 from salaries allowed by the New Tax Regime.

Read More,

A Big Relief For Charitable Trusts: Exit Tax Norms

Unlocking Opportunities: Registering As A Seller On The ONDC Online Platform

- Share this post on -

Especia in news

Contact us