Leave encashment rules for private company, Budget 2023: Money from the company in lieu of holidays…
[ad_1]
In the general budget, while giving relief to private employees, the government has increased the exemption limit of leave encashment to 25 lakhs. This provision has been made under Section 10 (10AA) (ii) of the Income Tax Act, 1961. However, no change has been made in the other provisions of the section. If someone encashes these holidays while in the job, then it will be considered as part of the salary.
If you are employed then you will know about leave encashment. In simple and easy words, it means to cash the remaining holidays. This information is given in the salary structure for both private jobs and government jobs. How many holidays do they have in a year that they can encash. Leave encashment comes under tax.
Generally, there are three types of leave in companies, which are sick leave, casual leave, also known as CL, and the third is earned leave. Casual leave lapses at the end of the year but sick leave and earned leave are carried forward. However, there is a limit on the holidays that can be carried forward.
The amount received from these holidays is considered part of income and is taxable. However, the central and state employees do not have to pay any tax on leave encashment. Employees working in the private sector, at the time of retirement or resignation, the amount received on leave encashment was not taxed on the maximum amount of 3 lakhs, but the amount above it was taxed. This time this exemption has been increased to 25 lakhs in the budget.
[ad_2]
Source link
