Leave Encashment Calculator & Section 10(10AA) Exemption Pro
Compute income tax exemption on earned leave encashment upon resignation or retirement under Section 10(10AA)(ii). Evaluate the four statutory conditions against the enhanced ₹25,00,000 cap, compute net tax liability, and export an A4 Full & Final Leave Settlement Advice.
work 1. Employment Separation & Salary Data
fact_check 2. Leave Balances & Tax Bracket
badge 3. Employee & Employer Profile
info Section 10(10AA) Rules & CBDT ₹25 Lakh Cap
Leave encashment received at retirement or resignation is governed by Section 10(10AA) of the Income Tax Act, 1961:
- Government Employees: 100% tax-free without any upper financial limit under Section 10(10AA)(i).
- Non-Government Employees: The exemption is strictly restricted to the least of 4 amounts: (1) Actual amount received, (2) Statutory limit of ₹25,00,000 (Notification No. 31/2023), (3) 10 months’ average salary, or (4) Cash equivalent of unavailed leave based on max 30 days per completed year of service.
- Fractional Service Rule: Only fully completed years of service are considered; fractions of a year (e.g. 7 months) are ignored.
- During Employment: Leave encashment availed while in continuous service is 100% taxable as salary income for all employees.
LEAVE ENCASHMENT SETTLEMENT ADVICE
Section 10(10AA) Income Tax Exemption Audit & Full and Final Statement
Section 10(10AA)(ii) Four Statutory Conditions Audit (least of the 4 conditions is fully exempt)
| No. | Statutory Exemption Condition | Assessed Amount (₹) | Statutory Basis / Provision |
|---|
Leave Balance Computation & Tax Settlement (figures in Indian Rupees ₹)
| Settlement Parameter | Computed Quantity | Statutory Rule / Compliance Detail |
|---|
In accordance with Section 10(10AA)(ii) of the Income Tax Act 1961 read with CBDT Notification No. 31/2023, out of the total leave encashment of ₹13,80,000 paid upon separation, an amount of ₹13,80,000 is determined to be exempt from income tax. The balance amount of ₹0.00 has been incorporated into taxable salary income for TDS under Section 192.