Leave Salary Calculator

CASE - 1
In case of an employee of the central government or a state government, any amount received as cash equivalent of leave
salary in respect of the period of earned leave at this credit at the time of retirement/superannuation is exempt from tax.
[Sec 10(10AA)(i)].

CASE - 2
In the case of a non-Government employee leave salary is exempt from under section 10(10AA)(ii) to the extent of the
least of the followings:
a. cash equivalent of the leave salary in respect of the periof of earned leave to the credit of an employee only
at the time of retirement whether on superannuation or otherwise {eg. voluntary retirement} (earned leave
entitlements cannot exceed 30 days for every year of actual service rendered for the employer from whose
service he has retired);or

b.10 months average salary; or

Average salary is to be calculated on the basis of average salary drawn during the period of 10
months immediately preceding the retirement/superannuation. [SALARY
= Baisc + D.A + COMMISSION - other allowance & perquisite]

c.Rs.300000 (Maximum limit as specified by government after 2 APRIL 1998)

d. leave encashment actually received at the time of retirement

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Provide inputs below

Name of the employee: Mr. X

Duration of Service: 24 Years

Leave entitlement for every year of service: 1.5 Months

Leave availed while in Service: 0 Months

Leave at the credit of employee at retirement: 36 Months

Leave Salary Reveived by employee: 795600

Average Salary received during the 10 months

immediately preceeding the retirement /
superannuation 22100

Leave entitlement as per Income Tax Act i.e one month's leave
for every year of service Err:502 Months

Leave Availed 0 Months

Leave to the credir of employee at the time of retirement Err:502 Months

a.

}
Cash Equivalent of Leave to the credit of Employee
at the time of retirement Err:502
b. 10 months' average salary 221000 Find the Lower Amount
c. Maximum Limit 300000 (if the figure is negetive
d. Leave Salary Received 795600 consider it Zero)

ENTER LOWER AMOUNT 221000

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Tax Treatment of Leave Salary Received by Mr. X

LEAVE SALARY RECEIVED 795600

Exemption u/s 10(10AA) 221000

TAXABLE LEAVE SALARY 574600