Earned Leave Encashment on LTC

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  1. Naval Kishore Verma

    Naval Kishore Verma New Member

    Kindly advice regarding Income Tax Implications of 10 Days Earned Leave Encashment along with LTC (Leave Travel Concession) for in service employees. Whether taxable or Exempted? Some DDOs in the state of Punjab are treating it to be Tax Exempt under LTC provisions.
     
  2. VAIBHAV DILIP RANE

    VAIBHAV DILIP RANE Active Member

    LTC Exemptions:-

    Under Section 10 (5) of the Income Tax Act, 1961 :-

    Any amount received by an individual, as the value of any travel concession or assistance, received by or due to him,...
    (a) from his employer for himself and his family, in connection with his proceeding on leave to any place in India ;
    (b) from his employer or former employer for himself and his family, in connection with his proceeding to any place in India after retirement from service or after the termination of his service,

    Subject to Conditions as prescribes under Rule 2B (Click Link - 17)

    Provided that the amount exempt under this clause shall in no case exceed the amount of expenses actually incurred for the purpose of such travel.
     
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  3. Naval Kishore Verma

    Naval Kishore Verma New Member

    Dear Vaibhav Ji,
    Thanks for the reply, but Kindly advice about Earned Leave Encashment availed at the time of LTC. To my knowledge, this is taxable and only the other part i.e. LTC reimbursement is tax exempt. Kindly correct me if I am wrong here.
    Regards,
    Naval Kishore Verma
     
  4. VAIBHAV DILIP RANE

    VAIBHAV DILIP RANE Active Member

    Earned Leave Encashment,

    If any such amount received, "During" the term of Service, then whether assessee is a Govt Employee or Non Govt Employee >> It is Fully Taxable.

    If any such amount received, "On" - Retirement or Leaving Job-
    > For Govt Employee -- It is Fully Exempt.
    > For Non Govt Employee -- Is Partly Exempt, to the extent Least of the Following,..
    (a) 10 months Average Salary before retirement or leaving job
    (b) Rs. 3,00,000 /-
    (c) Actual Amount received as earned leave encashment
    (d) Cash equivalent of the leave due at the time of retirement
     
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