Income Tax Notification no. 31/2023

Income Tax Notification no. 31/2023: CBDT Raises Exemption Limit of Leave Encashment to Rs. 25 Lakhs

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Income Tax Notification no. 31/2023: The Central Board of Direct Taxes (CBDT) has issued notification no. 31/2023 for increasing the exemption limit of leave encashment for non-government salaried employee.

Before this notification came into force, the Income Tax Act, 1961 provides exemption limit but the maximum exemption allowed was restricted to Rs. 3,00,000 only. Now with effect from 1st April, 2023 this limit increased to Rs. 25,00,000.

It’s important to note that if a non-government employee receives such payments from multiple employers within the same previous year, the aggregate amount exempt from income tax under section 10(10AA)(ii) of the Act should not exceed Rs. 25 lakh.

(Department of Revenue)
New Delhi, the 24th May, 2023

Notification No. 31/2023-Income-Tax | Dated : 24th May, 2023

S.O. 2276(E).—In exercise of the powers conferred by sub-clause (ii) of clause (10AA) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government, having regard to the maximum amount receivable by its employees as cash equivalent of leave salary in respect of the period of earned leave at their credit at the time of their retirement, whether superannuation or otherwise, hereby specifies the amount of Rs. 25,00,000 (twenty-five lakhs rupees only) as the limit in relation to employees mentioned in that sub-clause who retire, whether on superannuation or otherwise.

  1. This notification shall be deemed to have come into force with effect from the 1st day of
    April, 2023.

[Notification No. 31/2023/F. No. 200/3/2023-ITA-I]SOURABH JAIN, Under Secy.

Explanatory Memorandum : It is hereby certified that no person is being adversely affected by giving retrospective effect to this notification.

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