Group Leave Encashment Plan
Leave encashment is a benefit offered by an employer to its employees, where by an employee can accumulate his/ her leave over a period of time. The accumulated leave is paid in lump sum to employees or their dependants on retirement, death, disablement, voluntary retirement etc., in accordance with guidelines framed by the employer. Employee exits are uncertain which can lead you to major adverse cash flow situations. Hence it is prudent for you as an employer to setup a leave encashment fund to meet these future payments from time to time.
This can be best achieved by opting to contribute to the ICICI Prudential's Group Leave Encashment plan, which can help you meet your Leave Encashment liability.
What are the benefits of funding Leave Encashment with ICICI Prudential?
- Scheme setup assistance - ICICI Prudential shall assist in customizing solutions specific to your needs
- Manage your investments - ICICI Prudential offers a complete and competitive range of investment options keeping your needs in mind.
The investment plan options offered by us are as follows;
- Unit linked funds are market linked investments which help you to get good returns and empower you as an employer to decide the asset allocation best suiting their needs. Click here for details
- Dedicated service team - ICICI Prudential understands that service is of utmost importance and has a dedicated group service team to help service your requirements
- Claim Settlement - ICICI Prudential undertakes to settle claims and payouts within specified turn around times.
- Bundled life cover - ICICI Prudential group leave encashment plan provides a flat cover of Rs. 1000 to the employees.
What are the tax benefits under leave encashment?*
Contribution paid by the employer can be considered as a business expense
Under Section 10(10AA) of the Income Tax Act,
- For government employees, the leave encashment benefits received at the time of retirement are tax free
- For non-government employees leave encashment benefits received at the time of retirement are exempt from tax subject to the least of the following:
- Rs 3 lakh or such maximum amount fixed by the government of India from time to time
- Ten months' average salary - Average salary implies the average of the salary drawn during the last ten months prior to retirement
- Cash equivalent of the leave due at the time of retirement
- Leave encashment received at the time of retirement is exempt from Income tax up to the limit specified and subject to the conditions of section 10(10AA) Above tax benefits are as per Income Tax Act, 1961 and Income Tax Rules, 1962. Please consult your Legal/ Tax expert for details. ICICI Prudential Life Insurance Company Limited shall not be held responsible in any manner in case you do not get the above stated tax benefits. Please note that the prevailing and applicable tax laws shall be final, conclusive and binding on both the parties.
The employer chooses to put aside monies to meet the Leave Encashment liability. These monies are contributed into ICICI Prudential Leave Encashment plans, which subsequently earn returns and help grow the funds in line with the Leave Encashment liability. The fund created under the plan is further used to make claim payments on employee exits.