Leave Encashment

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

05 February 2010 Pls tell me that leave encashment is totally expamt in which case, or exampt upto a specified limit for which catogory of employees.

2) give an exmaple of computatiion of specifie limit

CA Prashant Gupta

CA Prashant Gupta (Expert)
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05 February 2010 leave salary is exempt at the time of retirment to govt employees u/s 10(10AA).
for other employee at the time of retirment least of below is exempt:
1 months of earned leave x Avg Salary
2 10 x Avg salary
3 Rs 300000/-
4 leave salary received.

for months of earned leave: take 30 days for every completed year and subtract leave taken. No convert rest in months
Avg Salary: immediatley preceeding 10 month salary avg. it includes basic+DA if term of employement provided+ fixed % of commission
example: Mr. A retires 16 March 2009. he worked 32 year 3 month. he taken 120 day leave. Salary is basic 5000 and no other. he got leave salary of rs. 200000
leaves 30 x 32 =960 days - 120 days = 840
avg salary 5000*10/10 = 5000.
months 852/30 = 28
so least of below
28 x 5000 = 140000
10 x 5000 = 50000
300000
200000