Payment of leave encashment process

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1

Hi,

Could you tell me that if an employee has received a salary hike in the middle of the year, then his unavailed leaves encashment for the entire year will happen on the original salary offered at the time of joining or on the new salary offered after hike?

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2

Hi Mugdha

Leave encashment should done on the last drawn basic or ctc as per your company policy.

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3

After Hike only

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4

Okay.

Thank you for your helpful reply.

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5

Leave Encashment, Gratuity is always calculated on Last Drawn Salary only

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6

Hi @Mugdhavn13

Different companies use different formulas for calculation. The general formula used by most of the companies is given below.

  1. 1 day basic salary X No of Earned Leaves

  2. (1 day basic salary + 1 day TA + 1 day DA) X No of Earned Leaves

All of these is as per the last drawn basic so it will be on the new hike amount the calculation has to be made.

Similarly for the taxation.

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7

It will be done on the last drawn salary

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8

6 posts were split to a new topic: Calculating Leave encashment based on last drawn basic pay or last drawn Fixed gross salary, which is correct?

9

Hi Guys,

Please enlighten me regarding Tax exemption on Leave encashment for the below (Private Sector).

  1. Leave encashment after resignation
  2. Leave encashment at the time of retirement
10

Hello Nanda,

  • Leave encashment exemption is applicable for resigned & retirement employees.
  • If employee worked 5 companies, exemption up to 3 lakhs exemption.

Exemption is considered based on the below scenario.

  1. Actual amount received.
  2. Average Salary of 10 months
  3. Maximum limit 3,00,000
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11

Thank you valuable feedback

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