Dear Forum
An employee is paid basic salary of ₹. 20,000 from April'25 - Dec'25 and ₹. 24,000 from Jan'26 to Mar'26 (after increment in Jan'26). If his privilege leave balance is 30 days as on 31/03/2026, what will be amount of leave encashment liability to be provided in accounts for Fy 2025-26.
Will it be ₹. 24,000 or ₹. 21,000 ?
Pleae share your views.
Regards,
For an employee with a 30-day leave balance as of March 31, 2026, the leave encashment liability should be provided at their current (last drawn) salary of ₹24,000, not the weighted average for the year, as accounting standards require provisions to reflect the expected future cost of settlement at the reporting date.
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