Retired in February but leave encashed in April. When is the benefit of exemption applicable?
Salary is taxable on a ‘due’ or ‘receipt’ basis, whichever is earlier. As you have retired in February 2024, the leave encashment became due to you in February 2024 itself. While section 10(10AA) of the Income Tax Act, 1961, provides an exemption for ‘payment’ towards leave encashment received, one would need to read the exemption … Read more