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El calculation
Dear Sir,
I am confused with regard to calculation of EL encashment amount at the time of resignation from job by an employee.
1) Whether it is compulsory to take 26 days a month for calculation purpose or can we take 30 days as well. Is there any binding law with regard to same or can vary depending upon company policy and general accepted practices.
2) Whether No of leaves to be calculated only for completed years of service or part om year as well.
for eg. One employee had joined on 01/11/2012 and is resigning on 5/012016 his salary is 79000pm from 01/04/2015 and 73000 before that.
Please advise. Urgent!!!
Replies (3)
/forum/leave-encashment-salary-sec-10-10aa--239833.asp
Thank you for the response maam.
But this article doesnot have answers to my queries.
- As per Factories Act, EL is computed as: 1 day for every 20 days worked during the previous calendar year. Sometimes, establishments may give EL exceeding this limit also. It is corporate specific. This link might provide more details: https://dgfasli.nic.in/H T M L/factyact/cviii79.htm
- Leave policy varies from company to company, only thing to be noted is that it should be as per statutory requirement or even better than that.
- For the purpose of exemption of income tax on leave encashment, you need to refer sec 10(10AA) of ITA
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