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Leave encashment on retirement: How much tax exemption can you claim?
Business Standard
|June 10, 2026
Leave encashment received at the time of retirement can provide a significant tax benefit, but the exemption available depends on the type of employer.
Under Section 10(10AA) of the Income-Tax Act, central and state government employees enjoy a complete tax exemption on leave encashment received on retirement or superannuation. There is no upper limit on the exempt amount. For private sector and other non-government employees, the exemption is restricted to the lowest of four amounts — the actual leave encashment received, the cash
This story is from the June 10, 2026 edition of Business Standard.
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