Leave encashment for employee still working


What is the process of leave encashment for employee still working in the company? Also the taxing part?


Any employee demanding leave encashment for their unused paid leave during their employment period is taxable as it is considered as income from salary. In this case, the employee can get tax relief under Section 89. As per Section 89, the employee can claim tax relief from the amount received through the leave encashment process. In order to get tax relief for leave encashment, the employee should file form 10E.

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