Smart people don’t ask for money in exchange for vacations! But not everyone understands this thing, that’s how you get away with it

New Delhi. Has your company ever offered you a vacation payback? Even if your base salary is 30,000, that means 1,000 rupees for one day and 15,000 rupees for 15 public holidays. Sounds like a good offer doesn’t it? But there’s a catch. If you receive money while working as a substitute for your vacation, the amount you receive is fully taxable. On the other hand, if you receive money as holiday pay after leaving work or retirement, the amount is tax-free up to 25 lakhs. Previously this limit for private employees was up to 3 lakh rupees, now the government has increased it to 25 lakh rupees. For government employees, that limit was already 25 lakhs.

However, the downside of taking vacation time while at work isn’t just a tax one, it has another downside as well. So, if your company offers you money in exchange for a vacation, doing some research before accepting the offer can save you from a big loss.

Also read this – Good news for working professionals! If you take money from the company instead of vacation, you get big tax breaks, it turns out a profit of 8 times

Which holidays are Encash?
Every company grants its employees different types of vacation. There is occasional or emergency leave, which expires at the end of the year. Paid or earned vacation time, on the other hand, counts toward your vacation credit. These public holidays are also carried forward beyond the end of the year and can be redeemed. Private companies maintain a cap on these holidays. If there are more than 70 public holidays in a company, the holidays start to expire, while in some companies this limit is only 45-50.

It is therefore necessary that, in addition to checking your vacation balance, you also review your company’s vacation policy. If the public holidays are close to the upper limit, vacation or vacation replacement is the right option. Or if you need money urgently, claim a withdrawal. Remember that this money is taxable. But if you have the opportunity to accumulate vacation days, then save them well.

What other disadvantages does taking vacation time while at work have?
During the work, the expectation of assessment and further development also remains. It’s possible that after the increase, your base salary will be higher than it is now. In such a situation, it can be a losing proposition for you to pay off the holiday now. Your salary at the time of leaving a company is your best salary at that company and instead of accrued vacation days, you will receive money equal to that salary. This means that the cost of your vacation will increase.

Therefore, if you need money or are at risk of forfeiting your vacation, you should only choose the option of having vacation taken while you are with a company, otherwise the best option is to have vacation time accumulated. When you leave the job, you get the money yourself instead. The benefit is that you don’t have to pay taxes on it.

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