Privilege Leave Encashment Calculation. - working days.. CiteHR

shettydeep Started The Discussion:

Dear Seniors,

Kindly help in calculating Privilege Leave Encashment.

We have 21 PL per year as per policy and 1 of our Employee has 24 PL balance.

How to calculate his encashment amount if his gross salary is 20000 p.m


Deepthi Shetty.

pon1965 -  Member Since: May 2009
Some companies have policies for leave encashment. In our company, one has to avail 1 week PL to be eligible for 2 weeks PL ncashment. PL encashment is normally on basic and it is taxable income at the hands of employees.


praveenk2911 -  Member Since: Feb 2008
Some companies allow encashment on CTC basis. In other words, it would be ( if you follow CTC method),
Annual CTC/ 12 X 21/30. Though this method is very rare. Mostly it is on the basis of Basic salary.

manjula_999 -  Member Since: Nov 2010
According to me, PL Leave Encashment calculation is Basic+DA*No.of days available/26 not 30days. Manjula

mani_pooja -  Member Since: Nov 2008
Hi deepti,

Manjula is absolutely right...

It must be calculated by any of these two methods-

(a) Mostly - Basic+DA/26*no of days leave to be encashed
(b) Very less - Gross salary/30*nof of days leave to be encahed ( ALMOST PER DAY SALARY/ 30 * UNUSED LEAVES)

asiskanti ghosh -  Member Since: Jun 2011
Subject : PL encashment calculation

Dear fnds,
1. If PL is 21 calendar days a yr., then it is suggestive that the calculation to be done as - (basic+d.a.)/30*no, of days to be encashed.
2. If PL is 21 working days a yr., then the calculation should be , (basic+d.a.)/26*no. of days to be encashed.

Asis Ghosh

rev408 -  Member Since: Jun 2011
Dear Friends,

The correct method would be -

Basic+DA/26 = amount payable for one day PL/EL to be encashed i.e. Rs. 00000 x No. of days to be encashed or settled at the time of superannuation, resignmation, etc. The amount so encashed is taxable as per IT Act.


dassudip -  Member Since: Jul 2010
Dear Frinds,

I think the PL encashment is not taxable(upto a certain limit) in case of retirement or resignation. The exemptions are different for Goverent and non government employees. The encashment happens normally on (basic +DA).



sumitk.saxena -  Member Since: Nov 2007
Dear Deepthi ,
greetings for the day,
the encashment for the calculatio of PL should be Gross salary/26 * no. of leaves,
encashment should be done on gross salary because if an employee is not leave without prior intemation the deduction of salary should be gross not only basic and in the leave register the colomn of total earning is there which accompained by net payable/gross salary not only basic, 26 will be working days as because 1 leave should be credited in the employee account after 20 working days, calculation of encsahment should be on working days not on paid days.
thanks & regards,
Sumit Kumar Saxena,
9899669071, 0120-4131277

suyoglabourconsultants -  Member Since: Feb 2010
Dear Deepthi,
I have gone through the comments of my dear friends and found the differences but one thing is common there that they all are insisting to pay leave encashments on basic + d.a.
ok as per the provisions it may be affirmative. but when existing employee of the unit has taken the leave and avail the same then on which salary it is worked out, the answer is on gross salary. by this analogy he could get encashment on the same when he is in your service.
The basic + d.a. formula would be followed only when the employee is leaving the job by any way. This is my personal opinion. may be i am wrong but to motivate the employees it is essential to develop the healthy environment in the unit.
Warm Regards,


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