Pl encashment rules - leaves encashment are based on Basics or Gross? - CiteHR
Cite.Co is a repository of information created by your industry peers and experienced seniors sharing their experience and insights.
Join Us and help by adding your inputs. Contributions From Other Members Follow Below...
All that I see here -make me feel good. Thank you !
Factories Act limits accumulation of PL to 30 days and silent on encashment. Hence it all depend on company's policy how to treat and make payment. Accumulation limit also can be enhanced as a welfare measure, as it will be helpful to get a lumpsum amount at the time of retirement after long service.
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

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.

Dear all,
Every company has its own policy whether Leave encahment will payout either @ Gross or Basic, but what is impact as per income tax.
if calculation is on Basic its is totally exempted upto 10 lac for whole life
if calculated on Gross then rest than basic will be taxable.
for example 25 days leave encahment
Basic= 15000
15000/30*25=12500 is totaly exempted in income tax up to limit of 10 lac
Gross = 35000 (other than basic= 20000)
20000/30*25=16667 is taxable.
same will reflect on Form 16.

Leave encashment has to pay on Gross Salary, any policy made by company has limited up to company.
Normally it is on basic salary.
Calculation should be from the present Basic+DA salary as per the Law...
Encashment of PL Should be done on Gross salary instead of Basic +DA
Thanks & Regards,
Sumit Kumar Saxena

As per Labour law EL should be credited for 20 Physical working days = 1 EL, how it comes. Pls explain

This discussion thread is closed. If you want to continue this discussion or have a follow up question, please post it on the network.
Add the url of this thread if you want to cite this discussion.

About Us Advertise Contact Us
Privacy Policy Disclaimer Terms Of Service

All rights reserved @ 2020 Cite.Co™