Now Reading: ITAT allows LIC employee Rs 9.04 lakh leave encashment exemption
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ITAT allows LIC employee Rs 9.04 lakh leave encashment exemption
A retired Life Insurance Corporation of India (LIC) employee has won relief from the Income Tax Appellate Tribunal (ITAT), Jaipur, after the tax department restricted the exemption on her Rs 9.04 lakh leave encashment to Rs 3 lakh. The tribunal, in an order pronounced on 28 September 2026, directed the assessing officer to allow exemption on the entire amount, relying on earlier decisions that applied the enhanced Rs 25 lakh limit introduced in 2023.
Renu Moongia retired on 30 June 2020 after serving LIC for over 30 years. She received Rs 9,04,669 as leave encashment and claimed exemption under Section 10(10AA) of the Income Tax Act. The Centralised Processing Centre had allowed only Rs 3 lakh as exempt, treating the rest as taxable. The tribunal also condoned a delay of 1,277 days in filing her appeal, accepting that her earlier tax consultant had failed to inform her about the proceedings.
The dispute arose because the enhanced Rs 25 lakh exemption limit for non-government employees was notified by the CBDT in May 2023 with effect from 1 April 2023, after Moongia had retired. The Jaipur tribunal relied on coordinate bench decisions that applied the enhanced limit in similar cases. Retirees who retired before April 2023 should review their exemption claims and consult a tax professional if they received an adjustment order restricting their exemption.
Indian Opinion Analysis
The ruling opens a path for non-government employees who retired before April 2023 to claim the enhanced Rs 25 lakh leave encashment exemption if their cases are still open. The tax department had restricted such claims to Rs 3 lakh under the old limit, but the tribunal has now applied the 2023 ceiling retrospectively through precedent. Whether this interpretation holds at higher appellate levels or becomes a broader trend depends on how many similar appeals reach the tribunals and whether the department challenges this line of decisions. Taxpayers with pending or time-barred claims must check appeal deadlines before acting.
The condonation of a 1,277-day delay also signals that tribunal benches may accept procedural lapses by tax consultants as valid grounds for late appeals, which could encourage more retirees to reopen old assessment orders.
Source: livemint.com
This brief was synthesised by AI from the source linked above. Methodology and corrections.
