Example:-Mr. X retired from ABC Ltd. on 11th March 2014 after serving for 30 years and 11 months and the employer has paid him leave salary of 5,00,000. At the retirement, he was getting basic pay of 22,000. Further he was getting dearness allowance of 4,000 and 50% of the DA forms the part of salary for retirement benefits. The employee was entitled for 3 months leave for every year of service, but the employee has availed 7 months leave throughout the service and has encashed 4 months leave. Compute leave salary exemption u/s 10(10AA) for the AY 2014-15.

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..... 22,000. Further he was getting dearness allowance of 4,000 and 50% of the DA forms the part of salary for retirement benefits. The employee was entitled for 3 months leave for every year of service, b .....

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..... x 10 = 2,20,000 DA = 4,000 x 10 x .50 = 20,000 Average Salary = (2,20,000 + 20,000)/10 = 24,000 Calculation of Unavailed Leaves: Leaves calculated - leaves availed - leaves encashed = (30 - 7 - 4) .....

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