Navigating LTA Payouts: How to Handle Unclaimed LTA for Departing Employees?

Hi, One of the employees is leaving the organization, and he has accumulated LTA which he has not claimed yet. His LTA entitlement is Rs. 20,000 per year, which is part of CTC. As per his joining and leaving date, I have calculated LTA as follows:

LTA Calculation

17-31st March-10: 20000/12*15/31 = Rs. 806
April-10 to March-11: Rs. 20,000
1-12th April-11: 20000/12*12/30 = Rs. 667
Total: Rs. 21,473

I have the following questions:
1. Is the above calculation correct?
2. If in any month the employee had LWP, should we deduct the applicable amount for these LWP days from his eligible amount of LTA?
3. Do we need to pay this as ex-gratia or as taxable LTA since the employee is not going to submit any bills?
4. How will this be presented in Form 16?
5. In accounting, how will it be treated?
6. Any other suggestions from members.

Thanks and regards,
Sushil

If it is part of CTC, a prorated calculation of LTA considering his LWP days is to be made. It is taxable income in the hands of the employee, and TDS shall be made accordingly.