Pooja,
This has two options but you have not cleared whether the employee resigned or been sacked off.
if it is the case -1 then the employee resigning and wants to be relieved on the same day, then no need of paying the last month's salary as it can be compensated towards notice period . else,if the employee has earned leaves and your organisation has got he option of encashable earned leaves,then that employee is to be paid his last month salary and the earned leaves can be considered towards the notice period compensation.
in the second case, that is the organisation sacks the employee then the org. has to pay the salary aswell as one or two months salary in advance as per the policies of the org.
the one or two months advance depends on the notice period ofthe organisation.