1)Average salary (basic salary + dearness allowance) of the last 10 months before the employee’s retirement or resignation
2) Exemption under Section 10(10AA) of IT Act
Other Important Points:
If you encash your leave days more than once during your work history, the maximum exemption of Rs. 3 lakh is applicable to the total amount you earn as leave encashment income from all jobs. So if you have already claimed exemption on Rs. 1 lakh after resigning from one job, then in the next jobs you will have a maximum of Rs. 2 lakh available as exemption.
Factories ACt,Shops and Establishment acts have provsions for Leave encashment.
Kindly read them as relavant to your factory/office etc.
2nd November 2018 From India, Pune