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The Factories Act limits the accumulation of PL to 30 days and is silent on encashment. Therefore, it all depends on the company's policy on how to treat and make payment. The accumulation limit can also be enhanced as a welfare measure, as it will be helpful to receive a lump sum amount at the time of retirement after long service.
From India, Hyderabad
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From India, Hyderabad
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Leave encashment during service can be on basic salary.
Leave encashment on separation (with full and final settlement) should be on total earnings (gross salary) as provided in the Shops & Establishment Acts.
T. Maheswaran
From India, Chennai
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Leave encashment on separation (with full and final settlement) should be on total earnings (gross salary) as provided in the Shops & Establishment Acts.
T. Maheswaran
From India, Chennai
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Dear Anonymous,
I referred to Jurisdiction of the Authority, Point No. 22 (1A) (i) - Leave of Delhi Shops and Establishment Act which says
(1A) (i) Privilege leave to which an employee is entitled under clause (a) of sub-section (1) or
under any such law, contract, custom or usage, award, settlement or agreement as is referred to
in section 3, or any part of such leave, if not availed of by such employee, shall be added to the
privilege leave in respect of any succeeding period to which he is so entitled to, however, the total
period of such privilege leave which may be accumulated by such employee shall not at any one
time exceed three times the period of privilege leave to which he is entitled after every twelve
months’ employment under that clause or under such law, contract, custom or usage, award,
settlement or agreement.
Regards,
SG
From India, Delhi
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I referred to Jurisdiction of the Authority, Point No. 22 (1A) (i) - Leave of Delhi Shops and Establishment Act which says
(1A) (i) Privilege leave to which an employee is entitled under clause (a) of sub-section (1) or
under any such law, contract, custom or usage, award, settlement or agreement as is referred to
in section 3, or any part of such leave, if not availed of by such employee, shall be added to the
privilege leave in respect of any succeeding period to which he is so entitled to, however, the total
period of such privilege leave which may be accumulated by such employee shall not at any one
time exceed three times the period of privilege leave to which he is entitled after every twelve
months’ employment under that clause or under such law, contract, custom or usage, award,
settlement or agreement.
Regards,
SG
From India, Delhi
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Dear all,
Every company has its own policy on whether Leave Encashment will payout either at Gross or Basic, but what is the impact as per income tax? If the calculation is based on Basic, it is totally exempted up to 10 lac for the whole life. If calculated on Gross, then the amount other than Basic will be taxable.
For example, let's consider 25 days of leave encashment:
Basic = 15000
15000/30*25 = 12500 is totally exempted from income tax up to a limit of 10 lac
Gross = 35000 (other than basic = 20000)
20000/30*25 = 16667 is taxable.
The same will reflect on Form 16.
Regards,
Dhananjoy
From India, Faridabad
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Every company has its own policy on whether Leave Encashment will payout either at Gross or Basic, but what is the impact as per income tax? If the calculation is based on Basic, it is totally exempted up to 10 lac for the whole life. If calculated on Gross, then the amount other than Basic will be taxable.
For example, let's consider 25 days of leave encashment:
Basic = 15000
15000/30*25 = 12500 is totally exempted from income tax up to a limit of 10 lac
Gross = 35000 (other than basic = 20000)
20000/30*25 = 16667 is taxable.
The same will reflect on Form 16.
Regards,
Dhananjoy
From India, Faridabad
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Leave encashment has to pay on Gross Salary, any policy made by company has limited up to company.
From India, Satara
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From India, Satara
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Calculation should be from the present Basic+DA salary as per the Law...
From India, Bangalore
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From India, Bangalore
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Encashment of PL Should be done on Gross salary instead of Basic +DA Thanks & Regards, From, Sumit Kumar Saxena
From India, Ghaziabad
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From India, Ghaziabad
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High Courts Judgments & Central Rules on leave encashment.docx
PF Circular for No PF in Encashment of Leaves.pdf