Leave encashment should be done on gross salary instead of basic salary, calculation formula should be Gross Salary/26 * no. of leave/leaves.
I would appreciate it if it can be clarified whether the leave encasement is done on gross salary or basic+da with appropriate act as per factory act 1948
From United Kingdom, London
3I would appreciate it if it can be clarified whether the leave encasement is done on gross salary or basic+da with appropriate act as per factory act 1948
From United Kingdom, London
If CTC = 15000 and Earned leave = 20 Deduction: Employee PF- 956 + ESIC- 234 = 1190 Employer PF- 996 + ESIC- 635 = 1631 Total = 2821 CTC- 15000-2821 = 12179 12179*12 /365= 400.5 400.5*20= 8010
From India, Panjim
From India, Panjim
All salaried have different type of leaves namely: Sick Leave, Casual Leave, Earned/Privilege leave, etc. If employees take lesser leaves than they are eligible for, most employers encash the left over leaves either annually or at the time of leaving the company. Of all types of leaves only earned or privilege leave is encashable.
Tax on Leave Encashment:
The tax of leave encashment is dependent on if you are government or private sector employee, or if you are encashing it at the time of retirement or mid-way. We take each case separately.
Tax Calculation:
The tax exemption would be minimum of the below 4 points:
Amount received as leave encashment – Rs 6 Lakhs
Maximum cap as stated by government – Rs 3 Lakhs
Last 10 months average basic salary & dearness allowance before leaving the job – Rs
2,50,000 (Rs 25000 X 10)
Cash equivalent of the leave balance, subject to maximum of 30 days for each completed year of service – Rs 1,37,500 (as per calculation below)
Earned leave eligibility as per above rule = 30 days X 25 = 750 days
Leaves used = 585 days
Leaves eligible for encashment (as per above rule) = 750 – 585 = 165 days (5.5 months)
Cash equivalent = 5.5 X 25000 = Rs 1,37,500
Tax exemption = Rs 1,37,500
Taxable component = Rs 6,00,000 – Rs 1,37,500 = Rs 4,62,500
From India
Tax on Leave Encashment:
The tax of leave encashment is dependent on if you are government or private sector employee, or if you are encashing it at the time of retirement or mid-way. We take each case separately.
Tax Calculation:
The tax exemption would be minimum of the below 4 points:
Amount received as leave encashment – Rs 6 Lakhs
Maximum cap as stated by government – Rs 3 Lakhs
Last 10 months average basic salary & dearness allowance before leaving the job – Rs
2,50,000 (Rs 25000 X 10)
Cash equivalent of the leave balance, subject to maximum of 30 days for each completed year of service – Rs 1,37,500 (as per calculation below)
Earned leave eligibility as per above rule = 30 days X 25 = 750 days
Leaves used = 585 days
Leaves eligible for encashment (as per above rule) = 750 – 585 = 165 days (5.5 months)
Cash equivalent = 5.5 X 25000 = Rs 1,37,500
Tax exemption = Rs 1,37,500
Taxable component = Rs 6,00,000 – Rs 1,37,500 = Rs 4,62,500
From India
Hi, I am calculating Earned Leave manually, So please let me know, how we can calculate,
if an employee consumed his leaves -7 CL & 7 SL and Holidays (company is giving 10-11 Holidays per year). How we will calculate EL in this case.
As every 20 days present generate an EL, How we calculate these 20 days. Sundays, Holidays and their own leaves included in these 20 days or not.
Please explain fully, i got confused after reading some responses that 240 days are there to calculate EL, how it is calculated and fixed as 240. Please mention if there is any formula.
From India, New Delhi
if an employee consumed his leaves -7 CL & 7 SL and Holidays (company is giving 10-11 Holidays per year). How we will calculate EL in this case.
As every 20 days present generate an EL, How we calculate these 20 days. Sundays, Holidays and their own leaves included in these 20 days or not.
Please explain fully, i got confused after reading some responses that 240 days are there to calculate EL, how it is calculated and fixed as 240. Please mention if there is any formula.
From India, New Delhi
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.
LEAVE ENCASHMENT NOT INCLUDED IN WAGES FOR P. F. CALCULATION.pdf
Leave Encashment & Salary Calculation.xls x