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.
Naveen Fintech Pvt Ltd
Kolkata
CA Inter
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Gupta Sachdeva & Co. Chartered Accountants
New Delhi
CA Final
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CAclubindia
