EMPLOYMENT LAW UPDATE
27th May 2023
Issue No. 05/23-24
THE MINISTRY OF FINANCE ISSUES NOTIFICATIONS INCREASING THE LIMIT ON TAX EXEMPTION FOR LEAVE ENCASHMENT
In furtherance to the budget proposal of 2023-24, the Ministry of Finance has notified the increase in tax exemption that is given on leave encashment upon retirement for salaried non-government workers. The limit is being raised from Rs. 3,00,000/- to Rs. 25,00,000/-. (For further information on the budget speech please refer to our previous update.)
Previously, the limit of Rs. 3 lakhs for tax exemption on leave encashment on retirement of non-government salaried employees was last fixed in the year 2002. In her 2023-24 budget speech, the Finance Minister Nirmala Sitharaman stated that in 2002 the highest basic pay in the government was of Rs. 30,000/- pm. In order to now have the limit in line with the increase in government salaries, it is proposed to increase this limit to Rs. 25,00,000/-.
In exercise of the powers conferred by Section 10(10AA)(ii) of the Income Tax Act, the new tax exempt limit for the maximum amount receivable by its employees as cash equivalent of leave salary in respect of the period of earned leave at the time of their retirement, whether superannuation or otherwise, will now be Rs. 25,00,000/-.
This notification shall be deemed to have come into force with effect from the 1st day of April 2023.
The notification can be accessed here.
| Disclaimer: This newsletter is for general information only and not intended for any solicitation. Views expressed in this newsletter are as on date and not necessarily of V Law Partners (“VLaw”). While reasonable efforts have been taken to provide correct information, VLaw cannot and does not warrant or guarantee the accuracy of the information provided in the newsletter. Readers are advised not to rely solely on this information when making any decision.
Suggestions: If you do not wish to receive our newsletters or have any comments or suggestions for us, please write to us at – admin@vlawpartners.com |