Employees cannot Claim Income Tax Exemption in Absence of Govt Notification fixing Income Limit for Encashment of Earned Leave Salary: Kerala HC

The Kerala High Court has ruled that employees cannot claim income tax exemption on earned leave salary in the absence of a government notification setting the income limit. The petitioners, retired from public sector undertakings and banks before April 1, 2023, sought retrospective review of the income limit under Section 10AA(ii) of the Income Tax Act, 1961. \r

The court noted the lack of notifications since 2002 despite multiple pay revisions, with the latest notification in 2023 setting the upper limit at Rs. 25 lakhs annually. Justice Murali Purushothaman directed the petitioners to approach the government for their claims, allowing the government to decide on their representations.