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Private employees will get tax exemption on leave encashment up to Rs 25 lakh

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New Delhi, 25 May (Hindustan Times). For private sector salaried employees, the tax exemption limit on leave encashment in lieu of retirement has been increased to Rs 25 lakh. The Central Board of Direct Taxes (CBDT) has issued a notification related to this.

In a statement issued on Thursday, the Finance Ministry said that in line with the announcement made in the budget for the financial year 2023-24, the tax exemption limit has been increased to Rs 25 lakh for cash in lieu of retirement leave for salaried employees of the private sector. Has been done.

A notification issued by the CBDT has said that the total limit of tax exemption under section 10(10AA)(2) of the Income Tax Act shall not exceed Rs 25 lakh. This section deals with payments to non-Government employees from employers. According to the notification, the system of tax exemption for non-government employees on a maximum amount of Rs 25 lakh in lieu of leave encashment will be applicable from April 1, 2023.

In fact, till now the limit of tax exemption on cash received by non-government employees in lieu of leave encashment was only three lakh rupees. In fact, this limit was fixed in the year 2002, when the highest pay scale in the government sector used to be Rs 30,000 per month.

Significantly, the Finance Minister had said in his budget speech that the tax exemption limit on the amount received as leave encashment for non-government sector employees would be increased from Rs 3 lakh to Rs 25 lakh.