Rahul Chhabra
Hr Professional
Insolvency N Gst Professional

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One of my employees joined in April-2018. This is his first employment as he has never worked anywhere before. After working for merely 5 months, he is leaving this job in August.
How should I calculate the Leave encashment exemptable amount for his leave balance of 20 days where the Leave Encashment Amount is Rs. 30,000/-. How should I calculate his last 10 months Average Salary as he just has only 5 working months till date?
As he is leaving, how should I calculate the tax exemptable amount?

From India, Hyderabad
It rules for Leave Encashment
During service leave encashment payments are taxable.
At time of retirement exemption as below:
a) Cash equivalent of unutilized earned leave (earned leave entitlement can not exceed 30 days for every year of actual service)
b) 10 months average salary
c) Leave encashment actually received. This is further subject to a limit of Rs 3,00,000 for retirements after 02.04.1998.
This is for private sector employees.
Rules are different for State and Central Govt employees.

From India, Pune
Very well explained by Rao Sir. Regards Rahul Chhabra
From India, Delhi
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