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Factories Act limits accumulation of PL to 30 days and silent on encashment. Hence it all depend on company's policy how to treat and make payment. Accumulation limit also can be enhanced as a welfare measure, as it will be helpful to get a lumpsum amount at the time of retirement after long service.
From India, Hyderabad
From India, Hyderabad
Leave Encashment during service can be on basic salary.
Leave encashment on separation (with full and final settlement) should be on total earnings (gross salary) as provided in the Shops & Establishment Acts.
T Maheswaran
From India, Chennai
Leave encashment on separation (with full and final settlement) should be on total earnings (gross salary) as provided in the Shops & Establishment Acts.
T Maheswaran
From India, Chennai
Dear Anonymous,
I referred to Jurisdiction of the Authority, Point No. 22 (1A) (i) - Leave of Delhi Shops and Establishment Act which says
(1A) (i) Privilege leave to which an employee is entitled under clause (a) of sub-section (1) or
under any such law, contract, custom or usage, award, settlement or agreement as is referred to
in section 3, or any part of such leave, if not availed of by such employee, shall be added to the
privilege leave in respect of any succeeding period to which he is so entitled to, however, the total
period of such privilege leave which may be accumulated by such employee shall not at any one
time exceed three times the period of privilege leave to which he is entitled after every twelve
months’ employment under that clause or under such law, contract, custom or usage, award,
settlement or agreement.
Regards,
SG
From India, Delhi
I referred to Jurisdiction of the Authority, Point No. 22 (1A) (i) - Leave of Delhi Shops and Establishment Act which says
(1A) (i) Privilege leave to which an employee is entitled under clause (a) of sub-section (1) or
under any such law, contract, custom or usage, award, settlement or agreement as is referred to
in section 3, or any part of such leave, if not availed of by such employee, shall be added to the
privilege leave in respect of any succeeding period to which he is so entitled to, however, the total
period of such privilege leave which may be accumulated by such employee shall not at any one
time exceed three times the period of privilege leave to which he is entitled after every twelve
months’ employment under that clause or under such law, contract, custom or usage, award,
settlement or agreement.
Regards,
SG
From India, Delhi
Dear all,
Every company has its own policy whether Leave encahment will payout either @ Gross or Basic, but what is impact as per income tax.
if calculation is on Basic its is totally exempted upto 10 lac for whole life
if calculated on Gross then rest than basic will be taxable.
for example 25 days leave encahment
Basic= 15000
15000/30*25=12500 is totaly exempted in income tax up to limit of 10 lac
Gross = 35000 (other than basic= 20000)
20000/30*25=16667 is taxable.
same will reflect on Form 16.
Regards
Dhananjoy
From India
Every company has its own policy whether Leave encahment will payout either @ Gross or Basic, but what is impact as per income tax.
if calculation is on Basic its is totally exempted upto 10 lac for whole life
if calculated on Gross then rest than basic will be taxable.
for example 25 days leave encahment
Basic= 15000
15000/30*25=12500 is totaly exempted in income tax up to limit of 10 lac
Gross = 35000 (other than basic= 20000)
20000/30*25=16667 is taxable.
same will reflect on Form 16.
Regards
Dhananjoy
From India
Leave encashment has to pay on Gross Salary, any policy made by company has limited up to company.
From India, Satara
From India, Satara
Encashment of PL Should be done on Gross salary instead of Basic +DA Thanks & Regards, From, Sumit Kumar Saxena
From India, Ghaziabad
From India, Ghaziabad
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High Courts Judgments & Central Rules on leave encashment.docx
PF Circular for No PF in Encashment of Leaves.pdf