Leave encashment - is there any ceiling of maximum days for leave encasement?

Please clarify that at time of separation what are rule as per factory act or labour law irrespective of company policy
1) leave encasement should be on gross or (basic+da)
2) is there any ceiling of maximum days for leave encasement
3) is leave encasement taxable
Please give Labour law/Factory act reference for all points.

Answer to queries
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.