Which employees may deduct the entire cash equivalent of earned leave encashed on retirement under section 19 of the Income-tax Act, 2025?
Question and options
Which employees may deduct the entire cash equivalent of earned leave encashed on retirement under section 19 of the Income-tax Act, 2025?
Central Government employees, but not State Government employees
Central and State Government employees
Employees of public sector undertakings and Government companies
Employees of any employer with ten years of service
Answer and explanation
Item 13 of the Table in section 19(1) of the Income-tax Act, 2025 allows the entire leave encashment on retirement for employees of the Central Government or a State Government. Every other employee, including employees of public sector companies, falls under item 14, where the deduction is the least of several limits, including an amount notified by the Central Government.
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