Man gets leave encashment tax benefit, but limit hiked later; ITAT allows Rs 12.27L
The Income Tax Appellate Tribunal (ITAT) in Chennai ruled in favor of a retired bank employee seeking the benefit of a 2023 tax exemption hike for leave encashment. The ruling allows the taxpayer to apply the increased Rs 25 lakh limit to his 2019-20 retirement income, despite the hike occurring after his initial filing.
Why it matters
This decision sets a precedent for how retrospective tax notifications apply to retired individuals, potentially impacting many taxpayers with pending proceedings.
You retire and get leave encashment, a part of which is exempt from tax. You file your income tax return claiming the exemption, but later the exemption limit is hiked. Are you entitled to the benefits of the enhanced leave encashment exemption limit?In one such case, the Income Tax Appellate Tribunal (ITAT), Chennai has given its decision in favour of a retired bank employee.The case involved a question that has come up before several tax tribunals: whether the higher leave-encashment exemption introduced in 2023 can also benefit employees who retired before that change, particularly when their tax proceedings were still being pursued.What the case is aboutThe taxpayer had retired from a bank during the financial year 2019-20.
Get smarter about the news
Sign up free for a feed built around what you actually care about, Dive Deeper research on any story, and the full text of every article.
Create free accountAlready have an account? Sign in