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Compliance · India · Comriq's own research

Leave-encashment tax exemption: what's confirmed, and what isn't.

The ₹25,00,000 lifetime exemption limit on leave encashment is confirmed under the old Income-tax Act, 1961 (CBDT Notification 31/2023, effective 1 April 2023). Whether the same figure carries forward under the Income-tax Act, 2025 — now in force — has not been confirmed by any official CBDT notification, FAQ or press release as of the last check.

Last verified 31 October 2026. research/india/leave-encashment-limit-2025-act.md (CBDT Notification 31/2023, PIB PRID 1927265).

What's confirmed vs. what's pending
QuestionStatus
Limit under the 1961 Act, s.10(10AA)(ii)₹25,00,000 — VERIFIED (CBDT Notfn 31/2023 + PIB release, 24–25 May 2023)
Limit under the Income-tax Act, 2025 (in force 1 Apr 2026)CA TO CONFIRM — no official notification, FAQ or press release located confirming the figure carries forward

Worth knowing

  • Secondary sources (tax advisory blogs) assert the ₹25 lakh figure continues into Schedule II of the 2025 Act, and they agree with each other — but agreement among unofficial sources is not the same as an official notification, so it isn't presented here as confirmed.
  • Comriq's own payroll engine keeps this figure as CA-to-confirm and blocks rather than silently computing a number, the same rule this page follows.
FAQ

Leave-encashment tax exemption: what's confirmed, and what isn't

Ask anything else; it answers from this site, or passes the question to the team.

Can I rely on ₹25,00,000 today?

For service ending before the 2025 Act's leave-encashment provisions are officially clarified, treat this as CA-to-confirm rather than settled. Ask your CA before relying on a specific figure for a payout happening now.

Why doesn't Comriq just publish the widely-repeated figure?

Because a client must never be able to say Comriq got a statutory number wrong — on money and statutory questions, an unconfirmed figure is flagged, never guessed.

See how Comriq People applies this.

Dated rules, read in words on every payslip, with a CA flag where something isn't confirmed yet.

See Comriq People