CBDT Circular on taxability of encashment of leave salary

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Amount received on encashment of leave salary due to employee either in service or at the time of retirement – Whether taxable as part of salary income

Circular : No 312 [F. No. 200/187/81-IT(A-I)], dated 31-8-1981.

1. A large number of references have been received by the Board on the decision of the Income-tax Appellate Tribunal, Madras Bench, in the case of N.B. Tendolkar v. ITO [1980] 4 Taxman 129. In this decision the Tribunal has held that the amount received by an assessee on encashment of leave due to him is not taxable.

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