For a non-government employee’s retirement leave encashment, which salary period is used to calculate the average monthly salary under the Income-tax Act, 2025?
Question and options
For a non-government employee’s retirement leave encashment, which salary period is used to calculate the average monthly salary under the Income-tax Act, 2025?
The ten months immediately preceding retirement
The eight months immediately preceding retirement
The last month of employment
The nine months immediately preceding retirement
Answer and explanation
Section 19 (Table item 14) of the Income-tax Act, 2025 uses ten times the average monthly salary for the ten months immediately preceding retirement as one of the limits. The same ten-month average is used for gratuity outside the Payment of Gratuity Act under Table item 6.
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