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Coimbatore Consumer Cause has drawn the attention of the Government to the discrimination in tax levy on leave salary at the time of retirement between government employees and others.
“In the case of government employees, the entire amount paid towards leave encashment (at the time of retirement) is not taxable. But the same is not applicable for other individuals be it employees in quasi government organisations, public sector undertakings, banks, insurance companies and those in the private sector. The tax exemption limit on leave encashment at the time of retirement (for such employees) is limited to Rs 3 lakh. Any sum beyond this amount is taxable. Since income is an income be it government employee or others, this discrimination should be removed,” appealed K Kathirmathiyon, Secretary, CCC.
Related: How leave encashment is taxed
While seeking removal of this discrimination in tax exemption limit under section 10 (10AA)(i)) of the Income Tax Act, Kathirmathiyon said “this ceiling has not been enhanced since 1998. Even if the government is not prepared to treat non-government employees on par with government employees, the exemption limit should have been increased from the existing Rs 3 lakh at least to a sum equivalent to the value of money (comparing the money value in 2016 with 1998).”
The CCC has requested the government to look into the issue and provide reasonable relief to the retiring non-government employees.
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